Unit 5: MC Questions

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Questions and Answers

What role does social pressure play in promoting corporate sustainability behaviors?

It creates financial incentives for companies to act unsustainably.

It encourages companies to implement self-regulation standards. (correct)

It diminishes the importance of certifications in sustainability.

It mandates government regulations for all companies.

Which of the following is NOT mentioned as a way to promote sustainability in businesses?

Bankers-oath

Government legislation (correct)

Equator principles

ISO 26000

What challenge is identified in resolving the tragedy of the commons?

The absence of a world government to enforce regulations. (correct)

The presence of multiple non-governmental organizations.

Overabundance of resources leading to mismanagement.

Lack of scientific research on sustainability.

Which of the following is considered a theoretical option in ensuring corporate sustainability?

Certifications and standards Signup and view all the answers

What is a common concern regarding certifications aimed at promoting sustainability?

They could result in deceptive marketing practices, often referred to as greenwashing. Signup and view all the answers

What is the primary reason firms might go beyond their legal obligations in terms of sustainability?

To enhance their reputation and legitimacy Signup and view all the answers

Which type of corporate social responsibility focuses on what is required by global stakeholders?

Legal responsibility Signup and view all the answers

What societal factor is increasingly influencing firms to adopt sustainable practices?

Growing social pressure from various groups Signup and view all the answers

How does the position of a firm in the supply chain affect its sustainability pressures?

More pressure the closer they are to the end customer Signup and view all the answers

What risk can arise from a firm being perceived as 'good' in sustainability?

Targeting and criticism from social media Signup and view all the answers

What financial effect did the Bluewater Horizon incident have on BP?

It permanently damaged stock prices Signup and view all the answers

What common consequence do firms face due to the wrongdoing of their industry peers?

Spillover effects damaging their reputation Signup and view all the answers

What are companies increasingly being asked to provide in relation to their sustainability efforts?

Sustainability reports and transparency Signup and view all the answers

What factor contributed to increased innovation among established car manufacturers?

Entry of Tesla into the market Signup and view all the answers

Which stakeholder group is primarily focused on social responsibility?

Society / NGOs Signup and view all the answers

What was the response of WestLB after the protest related to environmental concerns?

They engaged in collaborative discussions with stakeholders Signup and view all the answers

Why is reputation particularly important for banks in relation to stakeholder interests?

Maintaining a good reputation influences stakeholder trust and business strategy Signup and view all the answers

Which consequence did Nike aim to address by changing its approach?

Negative public perception due to sweatshops Signup and view all the answers

What is an example of a factor that could impact the bargaining power of suppliers?

Natural disasters affecting resource availability Signup and view all the answers

What was a key factor influencing the timeline of WestLB's response to environmental pressures?

Initial indifference followed by public pressure Signup and view all the answers

Which of the following factors does NOT typically contribute to resource scarcity?

Increase in renewable energy sources Signup and view all the answers

Study Notes

Economic Responsibility: Compliance with capitalist principles.
Legal Responsibility: Adhering to laws set by global stakeholders.
Ethical Responsibility: Meeting the ethical expectations of stakeholders.
Philanthropic Responsibility: Engaging in activities desired by stakeholders.

Importance of Going Beyond Obligations

Reputation: A valuable asset impacting brand value.
Legitimacy: Essential for operational success; lack of legitimacy discourages investments from shareholders and suppliers.

Pressures on Firms

Increased social demand for accountability in supply chains.
Activist and public mobilization are driving forces for sustainability.
Investment funds are divesting from fossil fuels, influencing broader corporate behaviors.
High demand for transparency and sustainability reporting, especially for companies closer to consumers.
Companies showing commitment to sustainability face scrutiny and potential backlash on social media.
Strategic withholding of sustainability certifications to prevent reputational harm.

Spillover Effects

Case of BP: Reputation damaged after the Bluewater Horizon disaster, with long-term impacts on stock prices.
Negative actions of one firm can affect peers, as seen with BP and Shell.

Self-Governance in Corporate Sustainability

Social Movements: Initiatives like Fridays for Future influence corporate practices.
Regulatory Frameworks: Banks established the bankers' oath and Equator Principles for greater accountability.
Certification Standards: ISO standards (e.g., ISO 26000) promote trust but can also raise questions about potential greenwashing.

Institutional Examples for Sustainability

Certifications: Establish standards that encourage sustainable practices.
Resource Scarcity: Highlights necessity for innovation, such as BMW's battery refurbishment initiative.
Government Regulations: Bans on fossil fuel vehicles push firms toward sustainable alternatives.
Market Dynamics: Consumer preferences shifting towards car-sharing services impact automobile ownership models.

Case Analysis: WestLB

WestLB faced systemic scrutiny and accountability for broader environmental impacts.
Stakeholder reactions influenced the bank's response to sustainability issues.

Stakeholders' Perspectives

Diverse Interests: Customers, NGOs, and shareholders hold varying expectations from firms.
Political Dimensions: Stakeholders, including state entities, can shape corporate sustainability discussions.
NGO influence grows when combined with public pressure, shifting corporate strategies from defensive to collaborative approaches.

Company Responses

Nike's Transformation: Efforts to eliminate sweatshop practices demonstrate responsiveness to stakeholder concerns.

Key Takeaway

Balancing stakeholder interests is crucial for maintaining reputation and driving business strategy in a sustainability-focused world.

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Description

Explore the complexities of sustainability in business as outlined in Learning Module 4. This quiz delves into corporate social responsibility, including economic, legal, ethical, and philanthropic obligations toward stakeholders. Understand why businesses might exceed their legal and market commitments to foster a sustainable future.