Could financial sector vigilance have avoided India's gas leak tragedy?

On May 7 as the Corona virus crisis dominated headlines around the world, a deadly gas leak occured at the Visakhapatnam factory of LG Polymers India Pvt Ltd (LGPI), killing thirteen people including children, and exposing thousands of nearby residents to toxic Styrene fumes. Hundreds were hospitalized with gas poisoning and many more evacuated from their homes.

Above: People taken for treatment following the gas leak. Photo credit: Press Trust of India

Known as the Vizag gas leak the tragedy occurred as the factory prepared to reopen following the relaxation of lockdown regulations imposed due to Covid-19.

Following a review, India's National Green Tribunal - tasked with overseeing cases related to environmental protection and conservation - ruled that “LG Polymers has absolute liability for the loss of life in the recent gas leak incident at its Visakhapatnam plant. The root cause thus appears to be the lack of experience of LG Polymers India and their Korean principal, LG Chem, in monitoring and maintaining full tanks of styrene that were idled for a long period of several weeks without operation."

An analysis of the financing behind the company reveals many major bank investors including BNP Paribas and ING - both signatories to the United Nations Principles of Responsible Banking. With this Shreya Kaushik of Fair Finance India is asking;  

Could financial sector vigilance have avoided the Vizag gas leak?

Above: The Visakhapatnam factory after the gas leak. Photo credit: Newsclick

Part of the Fair Finance International and Fair Finance Asia network, Fair Finance India is a civil society led coalition working towards ensuring a sustainable transparent financial sector in India, by encouraging the integration of human rights standard and ESG criteria in their policies.