ACCA Strategic Professional · Strategic Business Leader · Environmental issues
Verdane Energy, a utility, is assessing a new coastal wind farm. Findings: a regulator is consulting on carbon pricing that may pass into legislation within three years; a recent court ruling means developers must conduct biodiversity assessments before construction; and rising sea temperatures are altering wind patterns. The strategy team wants to classify these correctly and judge implications. Which classification and implication is most appropriate?
Carbon pricing consultation is political, the court ruling is legal, and altered wind patterns are environmental. Because the policy outcome is uncertain yet high impact for a long-lived investment, scenario planning is appropriate rather than waiting for legislation, which would leave the company reacting too late.
- ACarbon pricing consultation is Legal, the court ruling is Political, and wind patterns are Social; all are low impact
- BCarbon pricing consultation is Political (policy direction), the court ruling is Legal, and altered wind patterns are Environmental; scenario planning is suitable given the policy uncertaintyCorrect
- CCarbon pricing consultation is Economic, the court ruling is Environmental, and altered wind patterns are Technological; no action is needed until law passes
- DAll three are Environmental because they relate to the wind farm; PESTEL is not needed beyond this
Explanation
A consultation on carbon pricing is a political policy direction not yet law; the court ruling creates binding obligations so is legal; changing wind patterns from climate are environmental. Because the policy outcome and timing are uncertain but high impact, scenario planning is appropriate. Waiting for law to pass ignores the lead time of a wind farm investment.
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