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ACCA Strategic Professional · Strategic Business Leader · Reporting to stakeholders

Harlow Energy's sustainability report is prepared entirely by its marketing department, reports only favourable indicators, and has no external verification. Critics describe it as a public relations exercise that overstates the company's environmental performance. Which weakness of voluntary social and environmental reporting does this best illustrate?

It illustrates a credibility problem. Because the report is voluntary, prepared by marketing, selective in what it shows and lacks independent assurance, stakeholders cannot trust it, which is the risk of greenwashing in social and environmental reporting.

  1. ALack of credibility because of selective disclosure and absence of independent assuranceCorrect
  2. BExcessive cost caused by mandatory disclosure rules
  3. CDuplication of the statutory financial audit
  4. DInability to report any non-financial data

Explanation

Voluntary reports can be selective and unverified, which damages credibility, a key criticism often called greenwashing. The reporting is not mandatory, does not duplicate the financial audit, and clearly does include non-financial data.

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