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ACCA Applied Knowledge · Business and Technology · Governance in business organisations

A manufacturer decides to reduce packaging waste and to pay suppliers within agreed terms, even though neither step is required by law. Which description best fits this approach?

This is corporate social responsibility. The company is voluntarily considering its effects on the environment and on suppliers beyond what the law demands, which is the essence of CSR, rather than merely complying with legislation or focusing only on shareholder profit.

  1. ACorporate social responsibility, because the company is voluntarily taking account of its impact on society and the environmentCorrect
  2. BRegulatory compliance, because the company is following mandatory legal duties
  3. CProfit maximisation, because the only objective is to increase shareholder returns

Explanation

CSR means a business voluntarily considers its wider social and environmental impact beyond legal minimums. Since the steps are not legally required, regulatory compliance does not describe them. Profit maximisation alone ignores the wider stakeholder concern shown.

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