ACCA Applied Knowledge · Business and Technology · Environmental and sustainability factors
A listed company publishes a glossy sustainability report highlighting small recycling projects but omits a recent major pollution incident. Which criticism is most relevant?
The main criticism is greenwashing: the report stresses minor positive initiatives while hiding a significant pollution incident, so it is neither balanced nor complete. Stakeholders are misled about true environmental performance, which damages credibility and trust in the company's sustainability disclosures.
- AThe report suffers from greenwashing and lacks balance and completenessCorrect
- BThe report breaches the accruals concept in the financial statements
- CThe report is invalid because sustainability reports must be audited by regulators
Explanation
Selectively promoting positive actions while omitting a significant negative event misleads stakeholders about performance, which is greenwashing and a failure of balance and completeness. The accruals concept relates to financial statements, and sustainability reports are not universally required to be audited by regulators.
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