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Questions and Answers
What is an example of a certification that encourages corporate sustainability?
Self-regulation is an ineffective approach for companies to ensure sustainability.
False
Name one challenge in solving the tragedy of the commons.
The lack of a world government
The bankers' oath was created to restore _____ in the financial system.
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Match the following terms with their descriptions:
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Which of the following factors contributed to the market pressure on automotive companies to innovate?
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Consumers have a low bargaining power in the automotive market.
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What was one of the main criticisms faced by WestLB regarding its operations?
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BMW announced to refurbish batteries due to a shortage of ______.
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Match the following stakeholders with their potential influence:
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What principle did WestLB introduce to address stakeholder pressures?
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Urban millennials are increasingly interested in car ownership.
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What was one of the outcomes after the Ranaplaza disaster for H&M?
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What does CSR stand for in the context of business sustainability?
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Companies feel no pressure to ensure sustainability in their supply chains.
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What is a significant asset for a company's social evaluation?
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Major investment funds have announced to completely divest from __________.
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Match the types of responsibilities with their definitions:
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What can negatively impact a firm's reputation when involved in sustainability?
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Only activists put pressure on companies to be socially responsible.
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What dramatic event occurred in 2010 that impacted BP's reputation?
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Study Notes
Corporate Social Responsibility (CSR)
- 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
This quiz delves into Learning Module 4, focusing on the challenges of sustainability in business practice. It covers essential responsibilities including economic, legal, ethical, and philanthropic aspects, emphasizing the role of corporate social responsibility. Explore why firms might pursue sustainability beyond their basic legal or market requirements.