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ACCA Applied Knowledge · Business and Technology · Sustainable business practices

Orlin plc extracts a mineral and is told that strong sustainability requires natural capital to be preserved. Which approach is consistent with that 'strong sustainability' view, as opposed to 'weak sustainability'?

Strong sustainability holds that natural capital cannot be fully replaced by man-made capital, so critical natural resources must be preserved. Weak sustainability instead accepts depletion if the value is replaced by other forms of capital. That is why the option accepting depletion offset by investment is wrong.

  1. ANatural resources cannot be freely substituted by man-made capital, so critical natural capital must be maintainedCorrect
  2. BDepleting natural resources is acceptable if the proceeds are invested in man-made capital of equal value
  3. CEnvironmental costs should be ignored if the business is profitable
  4. DSustainability applies only to renewable resources owned by the business

Explanation

Strong sustainability holds that natural capital and man-made capital are not perfect substitutes, so critical natural capital must be preserved. The second option describes weak sustainability, where depletion is acceptable if offset by other capital. The other options are not sustainability views.

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