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ACCA Strategic Professional · Advanced Financial Management · Corporate environmental, social, governance (ESG) and ethical issues

Which statement best describes how a senior financial adviser should deal with a conflict between maximising short-term earnings and meeting the company's published ESG commitments?

The adviser should quantify the financial and reputational risks of each course, report them openly to the board, and recommend an option consistent with long-term value and honest disclosure. Ignoring commitments or publicising ones not followed would mislead stakeholders and breach ethical expectations.

  1. AShort-term earnings always take priority because shareholders are the only legitimate stakeholders
  2. BPublished ESG commitments should be dropped quietly whenever they reduce earnings
  3. CThe adviser should quantify the financial and reputational risks of both courses, report them transparently to the board, and recommend a course consistent with long-term value and honest disclosureCorrect
  4. DThe adviser should keep the commitments in public reports but not act on them internally

Explanation

The adviser's role is to inform decision-making with analysis of long-term value, risk and stakeholder impact, and to ensure disclosure is honest. Quietly dropping commitments or reporting commitments not acted upon would mislead stakeholders and breach ethical duties.

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