Skip to content

ACCA Strategic Professional · Strategic Business Leader · Stakeholder analysis and organisational social responsibility

Norvale Chemicals operates in a country with weak environmental law. Its factory discharges waste that is legal locally but damages a river used by villagers. The board has decided to install costly treatment equipment, citing fairness to the villagers, although no regulator requires it and competitors do not do it. Which level of Carroll's pyramid does the decision best illustrate?

The decision illustrates ethical responsibility. The company is going beyond legal requirements to avoid harm that its own operations cause and that stakeholders would regard as unfair. Philanthropy would be a discretionary gift to the community, not remedying damage arising from the company's own activities.

  1. ALegal responsibility, because the board is anticipating future regulation
  2. BEthical responsibility, because it goes beyond the law to avoid harm that stakeholders would see as unjustCorrect
  3. CPhilanthropic responsibility, because the money is spent for the benefit of the community
  4. DEconomic responsibility, because the equipment protects long-term production

Explanation

Ethical responsibility covers conduct society expects or considers fair even when not codified in law. Here the board acts to avoid harm to villagers, motivated by fairness. It is not philanthropic, because philanthropy is a discretionary gift unrelated to the firm's own operations, whereas this addresses harm caused by its own activities.

Did you get it right without looking?

One question tells you little. A timed set on Stakeholder analysis and organisational social responsibility shows your real accuracy, how long you take and where you lose marks.

Practise Stakeholder analysis and organisational social responsibilityFree diagnostic mock

More Stakeholder analysis and organisational social responsibility questions