Asbestos Compensation: The James Hardie Group
By Janis Wardrop, Tracy Wilcox and Peter Sheldon
Janis Wardrop and Tracy Wilcox are Lecturers at the University of New South Wales, and
Peter Sheldon is an Associate Professor at the University of New South Wales in Sydney
Australia.
I. Introduction
A. Case Synopsis
We developed this case to provide students with the opportunity to consider an actual business
scenario from a variety of different ethical perspectives. The case concerns the James Hardie
Group (JHG), a global building products company founded in Australia. For many years James
Hardie was Australia’s largest user of asbestos-related products, developing and marketing a
variety of asbestos products for use in industry and housing.
Like many other asbestos products manufacturers, JHG has faced increasing public
scrutiny of its affairs, as the victims of asbestos-related diseases seek compensation for the
suffering caused by the harmful effects of asbestos products. The means by which the firm has
dealt with this scrutiny and its compensation liability provide a valuable launching point into an
analysis of the complexity of ethical issues, in this case arising from what was once common
business practice.
It may be helpful to describe the various asbestos-related illnesses including
mesothelioma to students, who may not be aware of the existence and severity of such diseases.
.
B. Case Objectives:
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To analyze the ethical dimensions of contemporary business issue
To recognize the various ethical frameworks that can apply to a situation
To distinguish between legal issues and ethical issues in business practice
To evaluate differing stakeholder perspectives and examine the ways in
which business decisions impact on various stakeholders
II. CLASS ROOM MANAGEMENT
This case can be discussed in a single 1-hour class period. Start the class by summing up the
key points of the case – a brief timeline could be provided at this point. The class can then
consider the two ‘Facilitating Questions’ below, which can be given to students prior to class as
preparation.
B. Facilitating Questions
1. Who were the primary and secondary stakeholders? Describe their various
relationships.
The rights of each of the key stakeholders, and the duties of the corporation towards
them, can be examined in a systematic manner. The Stakeholders include shareholders,
employees of the firm, the end-users of James Hardie products in the building, energy
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2. What were the perspectives, priorities and rights of each of the primary
stakeholder? What were the duties of each?
Students can complete a table, filling in the columns for ‘Rights’ and ‘Duties’ for each
ALTERNATIVE 1: Further Classroom discussion
Break the class into small groups and allocate one of the following Application Questions to
each group. Each group has 20 minutes to discuss their allocated question. At the end of the 20
minutes, each group has 5 minutes to present their answer to the class.
C. Application Questions
1) What were the duties of the senior executives and directors of James Hardie
i. while asbestos products were being manufactured and sold?
ii. after sales of asbestos products had been banned in Australia?
iii. How did the company’s top-level decision makers take these rights
and duties into account?
2) Outline both the i) business case, and ii) moral case for adequate resourcing of
the asbestos victims’ Compensation Foundation. What role do you think
governments should play in assuring ethical conduct of firms such as JHG
towards their stakeholders?
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3) What were the main issues relating to corporate governance and the duties of directors
in this case?
4) This case reveals ethical issues at the individual, organizational and macro-systemic
levels. What are they?
a. Individual level?
b. Organizational level?
Consider the decision to carve up the JHG and establish an offshore company.
c. Macro-system level?
Consider asbestos industry practices across the world, and current patterns of
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D. Concluding Questions
1) What can we learn from the James Hardie case?
2) Do you think the ethical issues in this case could occur in other
organizations? Why/Why not?
ALTERNATIVE 2: Group Project
We use this case as a major assessment item for a large group of graduate business
students, coming from a wide range of disciplines including accounting, human resource
To avoid duplication and to broaden the range of theoretical approaches used, we allocate
different questions to the various teams within any one class. Students have approximately nine
weeks to complete their team report.
We spend class time assisting students in the development of a project plan or Gantt
Chart. Each group has the responsibility, three weeks into the project, of submitting a signed
Some of the questions used are provided below.
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Task 1: Stakeholder analysis
Evaluate the James Hardie case from a stakeholder perspective. In particular;
i.) Who were the stakeholders? Describe their various relationships.
Task 2: Ethical frameworks
Choose two of the following ethical frameworks as tools to analyze the James Hardie case.
Briefly define the main features of the two frameworks you have chosen.
What issues does each of the chosen frameworks reveal? How might they be resolved?
The three frameworks are:
i.) Duties (deontological ethics)
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For example, this case lends itself well to justice considerations, not only relating to
asbestos manufacture and use (an issue in common with asbestos firms around the
Task 3: Corporate Governance:
Examine the role of the board of directors in the James Hardie case.
i.) What are the corporate governance issues arising from the case?
Task 4: Professional Ethics, Social Responsibility and Role Conflict
Examine the role of the James Hardie board of directors and its external professional
advisors, particularly the auditors, with regard to all of the following:
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Their choices in seeking (or not seeking) information
Other References and Resources (Recommend Internet Sites or Books/Articles)
The James Hardie Group Case
Report for the Special Commission of Inquiry into the Medical Research and
Compensation Foundation (Jackson Inquiry) see
http://www.dpc.nsw.gov.au/publications/publications/publication_list_-_new
Gideon Haigh, Asbestos House: The Secret History of James Hardie Industries,
(Melbourne: Scribe, 2006).
Asbestos Disease
World Health Organization (WHO), 2006 Report on asbestos-related diseases, see
http://whqlibdoc.who.int/hq/2006/WHO_SDE_OEH_06.03_eng.pdf
Safe Work Australia, the Australian Government’s statutory agency for Occupational
Health and Safety, recently published a report into mesothelioma incidence, see
http://www.safeworkaustralia.gov.au/swa/AboutUs/Publications/Mesothelioma.htm .
Australian Safety and Compensation Council (ASCC), conducted a review of the
literature on asbestos management and control, see
http://www.safeworkaustralia.gov.au/swa/AboutUs/Publications/AsbestosLiteratureReviewSeries
.htm,
Support organization s for people with asbestos-related diseases
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In Australia:
Asbestos Diseases Foundation of Australia, http://www.adfa.org.au/
In the US:
Asbestos Diseases Awareness Association (ADAO),
http://www.asbestosdiseaseawareness.org/
There are also numerous other websites sponsored by law firms or medical practices.
International Agencies
International Labor Organization (ILO) , a global UN agency originally founded in 1919
and concerned with the rights of employees http://www.ilo.org/global/lang–en/index.htm
2006 Asbestos Report, see
http://www.ilo.org/global/About_the_ILO/Media_and_public_information/Press_releases/lang–e
n/WCMS_076282/index.htm
International Social Security Association, a global organization representing social
security agencies from across the world. http://www.issa.int/
2008 Asbestos Report: http://www.issa.int/Resources/Technical-Reports/Asbestos
The Asbestos Industry
Jock McCulloch and Geoffrey Tweedale, Defending the Indefensible: The Global
Asbestos Industry and its Fight for Survival (New York: Oxford University Press, 2008)
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An asbestos industry body: Chrysotile Institute, based in Quebec, Canada:
http://www.chrysotile.com/en/index.aspx
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