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ACCA Applied Knowledge · Business and Technology · Sustainable business practices

Carlow plc has a well-publicised CSR policy. Its directors are considering the following statements about why a business might adopt CSR. Which statement is the weakest argument FOR a business voluntarily adopting CSR beyond legal requirements?

The weakest argument is that CSR reduces short-term costs by diverting resources from core operations. CSR usually adds cost, and diverting resources is a common criticism. Reputation, attracting staff and customers, and lowering regulatory and reputational risk are the recognised business arguments for voluntary CSR.

  1. ACSR activity can enhance the company's reputation and brand loyalty
  2. BCSR can help attract and retain employees and customers who value ethical conduct
  3. CCSR spending reduces costs in the short term because resources are diverted from core operationsCorrect
  4. DCSR may reduce the risk of regulatory intervention and reputational damage

Explanation

CSR normally involves additional cost, so claiming it reduces short-term costs by diverting resources is not a valid argument; diverting resources from operations is a criticism, not a benefit. The other three are standard arguments: reputation, recruitment and customer appeal, and risk reduction.

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