ACCA Applied Knowledge · Business and Technology · Environmental and sustainability factors
A company advertises its products as 'eco-friendly' and 'carbon neutral' but cannot substantiate the claims, and its operations have not changed. Which term describes this behaviour, and why is it a risk?
The behaviour is greenwashing. The company makes unsupported environmental claims without changing operations, which risks losing the trust of customers and other stakeholders, damaging its reputation and possibly attracting regulatory action.
- ACorporate philanthropy; it reduces taxable profit
- BGreenwashing; it can damage trust and reputationCorrect
- CStakeholder mapping; it delays decisions
- DSustainable sourcing; it raises supplier costs
Explanation
Making unsubstantiated environmental claims to appear more sustainable than reality is greenwashing. If discovered, it can damage reputation, erode stakeholder trust and bring regulatory or legal action. Philanthropy, stakeholder mapping and sustainable sourcing do not describe misleading claims.
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