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ACCA Applied Knowledge · Business and Technology · Environmental and sustainability factors

A clothing retailer is criticised by campaigners because its suppliers use large quantities of water and discharge untreated dye into rivers. Which is the most likely direct business risk to the retailer from this environmental issue?

The most likely direct risk is reputational damage leading to lost customers, because campaigners' criticism of polluting suppliers can cause consumers to boycott the retailer. Tax rates, share capital and interest rates are not directly affected by such criticism.

  1. AA reduction in its corporation tax rate
  2. BDamage to its reputation leading to loss of customersCorrect
  3. CAn increase in its share capital
  4. DA fall in the interest rate on its borrowings

Explanation

Public criticism of supply chain pollution typically harms brand reputation and can cause customers to boycott the retailer. The other options are unrelated to the issue described: tax rates, share capital and interest rates are not directly triggered by such criticism.

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