ACCA Applied Knowledge · Business and Technology · Environmental and sustainability factors
A manufacturer is required by new legislation to pay a charge for each tonne of carbon dioxide its factories emit. Which type of environmental factor does this represent?
A mandatory charge per tonne of carbon emitted is a regulatory or legal pressure. It forces the business to bear the cost of its pollution, turning an external cost into an internal one, so it is not voluntary action or a demographic or social change.
- AA regulatory or legal pressure that internalises the cost of pollutionCorrect
- BA purely voluntary corporate social responsibility initiative
- CA demographic change in the labour market
- DA change in consumer tastes caused by social media
Explanation
A mandatory carbon charge is imposed by law, so it is a regulatory pressure. It makes the business bear the external cost of its pollution (internalising the externality). It is not voluntary, demographic or a change in taste.
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