Skip to content

ACCA Applied Knowledge · Business and Technology · Sustainable business practices

Marlow plc is deciding whether to close a factory that is profitable but pollutes a nearby river within legal limits. A director argues the board should consider the long-term effect on the community and the company's reputation as well as short-term profit. Which statement is the best justification for adopting CSR policies in this situation?

The best justification is that CSR can protect reputation and the company's licence to operate, which supports long-term value. It does not guarantee immediate profit, does not replace legal compliance, and is not a general requirement of IFRS Accounting Standards.

  1. ACSR spending always increases profit in the same financial year
  2. BCSR removes the need for the company to comply with environmental law
  3. CCSR can protect reputation and licence to operate, supporting long-term valueCorrect
  4. DCSR is required by IFRS Accounting Standards for all companies

Explanation

A strong CSR record can enhance reputation, customer and employee loyalty and the company's acceptance by society, supporting long-term sustainability. It does not guarantee same-year profit, it does not replace legal compliance, and IFRS Accounting Standards do not make CSR activity mandatory.

Did you get it right without looking?

One question tells you little. A timed set on Sustainable business practices shows your real accuracy, how long you take and where you lose marks.

Practise Sustainable business practicesFree diagnostic mock

More Sustainable business practices questions