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ACCA Applied Knowledge · Business and Technology · Political and legal factors affecting business

A government introduces a law requiring all listed companies to publish an annual report on their carbon emissions, with fines for non-compliance. From the perspective of a listed company, which statement best describes the effect of this regulation?

It increases compliance costs but also gives stakeholders comparable information. The law is mandatory with fines, so companies must spend resources collecting and reporting emissions data. It does not remove environmental considerations, is not voluntary, and applies to listed companies as stated.

  1. AIt increases compliance costs but also gives stakeholders comparable informationCorrect
  2. BIt removes the need for the company to consider environmental factors
  3. CIt is a voluntary code, so non-compliance carries no legal consequence
  4. DIt applies only to unlisted companies

Explanation

Mandatory reporting backed by fines creates compliance costs such as data collection and assurance, while giving stakeholders comparable information. It is not voluntary and applies to listed companies, so the other options contradict the facts.

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