Ethics, Sustainability and Global Governance

Introduction

International business creates value across borders, but it also distributes risks, responsibilities and power across multiple societies. A multinational enterprise may design a product in one country, finance it in another, source components from several jurisdictions, manufacture it elsewhere and sell it globally. This fragmentation can generate efficiency and innovation, yet it may also obscure responsibility for bribery, forced labour, environmental damage, tax avoidance and human-rights abuses.

Ethics, sustainability and global governance provide complementary ways to address these challenges. Business ethics examines what firms ought to do. Corporate responsibility concerns the duties and impacts of firms toward society. Sustainability asks whether economic activity can continue without undermining environmental and social systems. Global governance comprises the rules, institutions, norms and collaborative mechanisms that shape conduct across national boundaries.

For international managers, these issues are strategic rather than merely reputational. Ethical failures can cause fines, litigation, exclusion from public contracts, supply disruption, loss of investor confidence and employee turnover. Conversely, credible responsible practices can improve resilience, innovation, access to capital and stakeholder trust. The central managerial task is to embed ethical and sustainability considerations into decisions about markets, suppliers, investment, taxation, technology and corporate strategy.

Learning Objectives

By the end of this chapter, students should be able to:

1. Distinguish business ethics, corporate responsibility, sustainability, ESG and global governance.
2. Apply stakeholder and legitimacy perspectives to international business dilemmas.
3. Analyse corruption, human-rights, labour, taxation and environmental risks.
4. Explain anti-bribery controls, responsible sourcing, climate strategy and multinational accountability.
5. Evaluate ESG measures critically, including their limitations and the risk of greenwashing.
6. Recommend governance and compliance responses to a cross-border ethical problem.

1. Foundational Concepts and Competing Perspectives

Ethics and corporate responsibility

Ethics involves principles used to judge conduct as right or wrong, fair or unfair, harmful or beneficial. A legal action is not necessarily ethical: a company may exploit a regulatory gap without violating a specific statute. Conversely, a company may adopt standards that exceed legal minimums.

Corporate social responsibility (CSR) traditionally refers to a firm’s responsibilities toward society beyond immediate profit maximisation. Modern approaches increasingly treat responsibility as integrated with core operations rather than as philanthropy added after commercial decisions have been made. A firm’s donation to a community does not compensate for unsafe factories or discriminatory employment practices.

Sustainability and ESG

Sustainability concerns the long-term maintenance of economic prosperity, social well-being and ecological systems. The commonly used three-pillar model distinguishes:

• Economic sustainability: durable value creation, resilience and responsible use of capital.
• Social sustainability: human rights, decent work, inclusion, health, safety and community welfare.
• Environmental sustainability: climate stability, biodiversity, pollution prevention and resource conservation.

ESG—environmental, social and governance—provides a framework for assessing how an organisation manages financially material and societal risks. ESG is not identical to sustainability. ESG often emphasises measurement, disclosure and investor decision-making, whereas sustainability may include wider questions of intergenerational justice and planetary limits.

Stakeholder theory

Stakeholder theory holds that a firm should consider parties who affect, or are affected by, its activities. Stakeholders include shareholders, employees, customers, suppliers, governments, communities, creditors, civil-society organisations and future generations. The theory challenges a narrow view that managers owe duties only to shareholders.

Stakeholder analysis should examine four questions:

1. Who is affected, and how severely?
2. Who has power, legitimacy or urgency?
3. Which interests conflict?
4. What process will produce a fair and accountable decision?

Stakeholder interests are not automatically equal in every decision. A firm may need to prioritise preventing serious human-rights harm over a modest reduction in shareholder returns. Transparent reasoning, consultation and remedy are essential when trade-offs are unavoidable.

Other useful theories

Utilitarianism evaluates actions by their consequences and seeks the greatest overall benefit. It is useful for comparing impacts but may permit serious harm to a minority if aggregate benefits appear larger.

Rights-based ethics focuses on fundamental rights such as freedom from forced labour, discrimination and unsafe conditions. It places limits on actions that might otherwise be justified by economic efficiency.

Justice and fairness theories examine whether benefits, burdens and procedures are distributed fairly. This is important when global firms locate pollution or hazardous work in countries with weaker bargaining power.

Virtue ethics asks what a good organisation and responsible manager would do. Integrity, courage, fairness and prudence are organisational capabilities, not merely personal traits.

Institutional and legitimacy perspectives emphasise that firms operate within social expectations, laws, industry norms and cultural systems. A firm may seek legitimacy through reporting and certifications, but symbolic compliance without substantive change creates legitimacy risk.

2. Global Governance and Multinational Accountability

There is no single world government regulating all international business. Instead, global governance is polycentric: authority is distributed among national governments, international organisations, courts, investors, industry associations, civil-society groups and private standard setters.

Important sources include:

• national anti-corruption, labour, environmental, securities and tax laws;
• treaties and conventions, including instruments addressing bribery, labour rights and climate change;
• the UN Guiding Principles on Business and Human Rights;
• the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct;
• International Labour Organization conventions and fundamental principles;
• voluntary initiatives such as the UN Global Compact;
• contractual requirements, lender standards, stock-exchange rules and sustainability reporting frameworks.

Voluntary standards can establish expectations where law is weak, but they do not replace public enforcement. Soft law becomes more influential when incorporated into contracts, procurement rules, investor mandates or mandatory disclosure regimes.

The accountability gap

Multinational enterprises can exploit differences between jurisdictions. A parent company may claim that an overseas subsidiary is legally separate; a lead firm may argue that an independent supplier is responsible for workplace conditions; a platform may assert that local contractors are not employees. These legal distinctions can obscure practical influence and responsibility.

Accountability is strengthened through:

• clear group-wide policies;
• board oversight;
• due diligence across subsidiaries and supply chains;
• contractual standards backed by monitoring;
• grievance and whistleblowing channels;
• remediation for affected parties;
• public reporting supported by evidence;
• cooperation with regulators and communities.

A sophisticated accountability approach recognises that control is not the only relevant factor. A company may have limited formal ownership but substantial purchasing power, technical influence or knowledge of risk.

3. Corruption and Anti-Bribery Compliance

Corruption includes bribery, extortion, embezzlement, fraud, trading in influence and abuse of entrusted power. Bribery occurs when something of value is offered, promised, given, requested or accepted to influence an improper decision. It may involve public officials or, in many legal systems, private-sector actors.

International firms face risks through agents, customs brokers, distributors, joint-venture partners, consultants and politically connected intermediaries. Common warning signs include unusually high commissions, vague services, requests for cash, offshore accounts, refusal to provide ownership information and pressure to bypass procurement controls.

Core elements of an anti-bribery programme

An effective programme is risk-based rather than merely documentary. It normally includes:

1. Leadership commitment: directors and senior executives model zero tolerance.
2. Risk assessment: exposure is assessed by country, transaction, sector, partner and payment type.
3. Policies and procedures: rules address gifts, hospitality, facilitation payments, charitable donations, political contributions and conflicts of interest.
4. Third-party due diligence: intermediaries are screened, approved, trained and monitored.
5. Financial controls: payments require documentation, segregation of duties and accurate records.
6. Training and communication: training is tailored to roles and local risks.
7. Reporting and investigation: confidential channels protect good-faith reporters.
8. Discipline and remediation: violations produce proportionate consequences and control improvements.
9. Testing and continuous improvement: audits and data analytics identify unusual activity.

A policy that prohibits bribery but rewards employees solely for rapid sales may create contradictory incentives. Ethical culture depends on what leaders measure, praise and punish.

4. Human Rights, Labour and Responsible Sourcing

The responsibility to respect human rights applies throughout a firm’s operations and business relationships. Relevant risks include forced labour, child labour, excessive working hours, wage theft, discrimination, unsafe workplaces, suppression of worker voice, land dispossession and violence against communities.

Human-rights due diligence

A practical due-diligence cycle contains five connected activities:

1. Identify and assess: map operations and supply chains; consult workers and affected communities; evaluate severity, scale, scope and likelihood.
2. Integrate and act: assign responsibility, change purchasing practices, improve conditions and use leverage with suppliers.
3. Track effectiveness: measure whether actions reduce harm, not merely whether audits were completed.
4. Communicate: disclose material risks, actions and unresolved limitations accurately.
5. Remediate: provide or cooperate in remedy when the firm caused or contributed to harm, and use leverage when directly linked to harm.

Severity matters. A minor documentation failure and a credible risk of forced labour should not receive the same priority. Traditional social audits may miss abuses because workers fear retaliation, auditors receive incomplete information or conditions change after announced visits. Worker interviews, trade-union engagement, unannounced assessments, grievance data and purchasing-data analysis can improve assurance.

Responsible sourcing

Responsible sourcing means integrating ethical, social and environmental criteria into procurement and supplier management. Effective practice includes supplier codes aligned with recognised rights, realistic delivery schedules, fair pricing, traceability for high-risk materials, supplier capability-building and consequences for persistent non-compliance.

Immediate supplier termination is not always responsible. It can remove income from workers and eliminate the buyer’s leverage. However, termination may be necessary where there is severe abuse, refusal to remediate or imminent danger. The decision should consider worker impact, available alternatives and the firm’s contribution to the problem.

5. Taxation and Corporate Citizenship

Tax is both a legal obligation and a question of corporate citizenship. International firms may structure operations to reduce tax through transfer pricing, intellectual-property licensing, debt arrangements or location of intangible assets. Legitimate tax planning must be distinguished from evasion, which involves illegal concealment or misrepresentation. Aggressive arrangements may be technically legal yet inconsistent with the spirit of tax rules and public expectations.

Key risks include profit shifting, artificial allocation of income, inadequate transfer-pricing documentation, use of secrecy jurisdictions and inconsistent country-by-country reporting. The OECD/G20 Base Erosion and Profit Shifting project and related international initiatives seek to align taxation with economic activity and improve transparency.

Boards should ask:

• Is the arrangement commercially substantive?
• Are profits reported where value is created and risks are managed?
• Would the firm defend the structure publicly?
• Is the tax strategy consistent with stated values and sustainability commitments?
• Could the arrangement undermine host-country public services?

Tax decisions illustrate that compliance, ethics and strategy overlap. A company may reduce short-term tax expense while increasing regulatory, reputational and political risk.

6. Environmental Responsibility and Climate Strategy

Environmental responsibility involves preventing pollution, reducing resource use, protecting biodiversity and managing climate-related risks. International firms encounter different environmental laws, infrastructure conditions and stakeholder expectations, but cross-border supply chains connect impacts across jurisdictions.

Climate risk and strategy

Climate risk has two broad dimensions:

• Physical risk: damage from heat, floods, storms, drought and changing ecological conditions.
• Transition risk: policy, technology, market and reputational changes associated with moving toward a low-emissions economy.

A credible climate strategy generally includes:

1. measuring greenhouse-gas emissions using defined organisational and operational boundaries;
2. setting targets consistent with a credible transition pathway;
3. prioritising absolute emissions reductions and energy efficiency;
4. procuring or generating lower-carbon energy where appropriate;
5. redesigning products, logistics and facilities;
6. engaging suppliers and customers;
7. using high-quality removals only for residual emissions that cannot reasonably be eliminated;
8. disclosing assumptions, progress and uncertainty.

Emissions are commonly grouped as Scope 1 (direct emissions from owned or controlled sources), Scope 2 (indirect emissions from purchased energy) and Scope 3 (other value-chain emissions). Scope 3 measurement is often uncertain, but uncertainty is not a reason to ignore material impacts. Estimates should disclose methods, data quality and boundaries.

Environmental claims must be specific and substantiated. Terms such as “green,” “carbon neutral” or “sustainable” can mislead if they rely mainly on offsets, omit significant impacts or lack a defined comparison. Greenwashing is a governance failure as well as a marketing problem.

7. ESG Governance, Measurement and Disclosure

ESG governance assigns responsibility for identifying, managing and reporting material environmental, social and governance matters. The board should oversee purpose, risk appetite, major impacts and disclosure integrity; executives should integrate ESG into strategy, capital allocation, incentives and operations.

A useful control architecture includes:

• board-level oversight and relevant expertise;
• management ownership with clear responsibilities;
• materiality assessment informed by stakeholders and investors;
• documented data definitions and controls;
• internal audit and independent assurance where appropriate;
• escalation procedures for serious incidents;
• executive remuneration linked to balanced, verifiable outcomes rather than easily manipulated indicators.

ESG metrics can be quantitative or qualitative. Examples include injury rates, employee turnover, emissions intensity, supplier-assessment coverage, verified grievances, board independence and corruption incidents. Metrics require context: a falling incident count might indicate improvement—or under-reporting.

A simple emissions-intensity measure is:

where I is emissions intensity, E is greenhouse-gas emissions measured in tonnes of CO₂-equivalent, and R is a defined activity or revenue measure. The units are, for example, tonnes CO₂e per million dollars of revenue or tonnes CO₂e per unit produced. The measure is meaningful only when the boundary, period, denominator and data method are consistent. Intensity can improve while total emissions rise if output grows faster than emissions; therefore, firms should report both absolute emissions and intensity where relevant.

Materiality and trade-offs

Financial materiality asks whether an issue could affect enterprise value, cash flows, access to capital or risk. Impact materiality asks how the firm affects people and the environment. A matter may be important under one perspective, both, or neither. International managers should avoid treating materiality as a purely technical exercise: affected communities may identify severe impacts before they appear in financial data.

8. An Integrated Decision Framework

When facing a cross-border dilemma, managers can use the following process:

1. Define the decision and affected parties. Separate facts from assumptions.
2. Map legal and policy requirements. Identify applicable home-country, host-country and contractual rules.
3. Assess impacts and rights. Consider severity, reversibility, distribution and vulnerable groups.
4. Identify incentives and power. Examine who benefits, who bears costs and whether the firm contributed to the risk.
5. Generate alternatives. Do not assume the choice is simply profit versus ethics.
6. Apply ethical tests. Ask whether the option respects rights, produces defensible consequences, is fair and reflects organisational integrity.
7. Consult and escalate. Engage workers, communities, compliance officers, legal counsel and relevant experts.
8. Decide, document and implement. Assign owners, resources, timelines and indicators.
9. Remedy and learn. Correct harm, protect complainants and revise systems.

This framework does not eliminate judgement. It makes judgement more transparent and reduces the risk that urgent commercial objectives crowd out serious ethical analysis.

Applied Case: The Meridian Electronics Battery Supply Chain

This is a fictional illustrative case.

Background

Meridian Electronics, a multinational producer of energy-storage systems, sources cobalt-containing components through a trading company in Country A. Meridian has a supplier code prohibiting child labour and unsafe work. Its annual ESG report states that 98 percent of strategic suppliers have been audited.

Problem

A civil-society organisation reports that informal miners, including adolescents, work near one of Meridian’s upstream processors. The processor’s documents appear compliant, but Meridian cannot trace all material beyond its first-tier supplier. At the same time, a major customer demands lower prices and faster delivery. Meridian’s procurement team proposes terminating the supplier immediately and replacing the material with a more expensive source. Finance warns that the change could make the product uncompetitive.

Analysis

The issue involves human rights, responsible sourcing, commercial pressure, disclosure accuracy and remediation. The 98 percent audit figure does not establish that risk is controlled: audits may not cover upstream actors, worker voice may be weak, and audit completion is an activity measure rather than an outcome measure.

Stakeholder analysis identifies affected miners and children, nearby communities, workers in formal facilities, Meridian employees, customers, investors, the supplier and the company’s shareholders. Rights-based reasoning gives priority to preventing child labour and serious injury. Stakeholder theory also requires consideration of workers who could lose income if the supply chain is abruptly abandoned.

Meridian should determine whether it caused, contributed to or is directly linked to the harm. Its purchasing targets and lack of traceability may have contributed to conditions. It should not rely solely on the supplier’s legal separation.

Approach and solution

Meridian should:

• suspend new purchases from the highest-risk channel while maintaining safe continuity where immediate abandonment would worsen harm;
• conduct independent, worker-informed investigation beyond first-tier suppliers;
• establish chain-of-custody controls and disclose limitations;
• require a time-bound remediation plan addressing child protection, safe work and access to education;
• engage local authorities, credible community organisations and worker representatives;
• revise purchasing practices so price and lead-time pressure do not encourage abuse;
• provide or support remedy for affected children and workers;
• develop alternative sources while preserving leverage where remediation is credible;
• report the incident and corrective actions accurately to the board, customers and investors.

Outcome

In the illustrative scenario, Meridian discovers that the processor did not directly employ children but purchased from unregistered intermediaries. The company funds an independent monitoring programme, changes supplier contracts, increases traceability and temporarily accepts lower margins. After eighteen months, verified child-labour incidents decline, but traceability remains incomplete. Meridian reports both progress and limitations rather than claiming a risk-free supply chain.

Learning points

First, compliance percentages can conceal material exposure. Second, responsible sourcing requires purchasing reform and remedy, not only supplier policing. Third, exit is sometimes necessary but should be assessed for unintended harm. Finally, credible ESG communication includes uncertainty and unresolved problems.

Contemporary Developments and Critical Limitations

International business is moving from voluntary commitments toward more mandatory human-rights, climate and sustainability due diligence in several jurisdictions. Investors and lenders increasingly request comparable information, while regulators scrutinise misleading environmental and social claims. Digital traceability, satellite monitoring, automated anomaly detection and generative AI may improve risk identification.

Technology does not guarantee ethical outcomes. AI systems can reproduce biased data, misclassify suppliers, expose sensitive worker information or create false confidence in automated scoring. Human oversight, data minimisation, explainability and protection from retaliation remain essential. A supplier ranked “low risk” by an algorithm must not be treated as safe without contextual investigation.

Important limitations affect ESG practice:

• ratings agencies use different definitions and weighting systems;
• disclosure can become a compliance exercise detached from operations;
• audits may privilege documentation over lived experience;
• firms may shift impacts to suppliers or countries rather than reduce them;
• measuring social outcomes is difficult and sometimes ethically intrusive;
• standards can impose costs on smaller suppliers without providing capacity support;
• shareholder and stakeholder interests may conflict;
• voluntary initiatives may lack enforcement and remedy.

Best practice therefore combines legal compliance, ethical reasoning, stakeholder participation, operational controls, transparent measurement and independent challenge. The aim is not to produce a perfect score but to reduce real harm and make decision-makers accountable.

Chapter Summary

Ethics, sustainability and global governance are interconnected foundations of responsible international business. Stakeholder theory broadens analysis beyond shareholders, while rights, justice, utilitarian and virtue perspectives provide different tools for evaluating difficult choices. Multinational accountability depends on governance across subsidiaries and supply chains, not merely on formal legal ownership.

Corruption risk requires leadership commitment, risk-based due diligence, financial controls, third-party oversight, reporting and remediation. Human-rights due diligence should identify impacts, integrate action, track effectiveness, communicate honestly and provide remedy. Responsible sourcing must address purchasing practices and worker outcomes, not simply audit completion. Tax strategy should consider legality, substance, transparency and corporate citizenship. Climate strategy requires attention to physical and transition risks, absolute emissions, value-chain impacts and credible claims.

ESG governance links board oversight, strategy, controls, metrics and disclosure. Measures such as emissions intensity are useful only when boundaries and denominators are clear. Mandatory regulation, technology and investor scrutiny are increasing, but ratings, audits and algorithms have limitations. The most credible international firms integrate ethical judgement and stakeholder accountability into everyday commercial decisions.

Key Terms

Accountability: The obligation to explain decisions, accept responsibility and provide remedy for harm.

Anti-bribery compliance: Policies and controls designed to prevent, detect and respond to bribery.

Business ethics: Principles used to evaluate right, wrong, fairness and responsibility in business conduct.

Corporate social responsibility: Organisational responsibilities and impacts toward society.

Due diligence: A continuing process to identify, prevent, mitigate, track and communicate risks and impacts.

ESG: Environmental, social and governance factors used to assess organisational performance and risk.

Forced labour: Work extracted under threat, coercion or inability to leave freely.

Global governance: Cross-border rules, institutions, norms and collaborative processes shaping conduct.

Greenwashing: Misleading presentation of environmental performance or claims.

Impact materiality: The significance of a firm’s effects on people and the environment.

Legitimacy: Social acceptance that an organisation’s actions are appropriate within prevailing norms.

Remediation: Actions taken to correct or compensate for harm.

Responsible sourcing: Procurement that incorporates human-rights, labour, environmental and governance standards.

Scope 1 emissions: Direct emissions from owned or controlled sources.

Scope 2 emissions: Indirect emissions associated with purchased energy.

Scope 3 emissions: Other indirect value-chain emissions.

Stakeholder: A party that affects or is affected by an organisation.

Sustainability: Long-term value creation that preserves economic, social and environmental systems.

Tax avoidance: Arranging affairs to reduce tax, potentially legally but sometimes contrary to the intent of tax rules.

Whistleblowing: Reporting suspected wrongdoing through internal or external channels.

Review Questions

Short Answer Questions

1. How does ESG differ from sustainability and CSR?
2. What are the five broad activities in human-rights due diligence?
3. Why can a multinational be accountable for supplier-related harm?
4. Distinguish physical climate risk from transition risk.
5. Why is audit completion an inadequate measure of responsible sourcing?

Long Answer Questions

1. Compare stakeholder theory, rights-based ethics and utilitarianism as approaches to international business dilemmas.
2. Explain the components of an effective anti-bribery compliance programme.
3. Discuss the ethical and strategic issues involved in aggressive international tax planning.
4. Evaluate the role and limitations of ESG reporting in multinational governance.
5. Explain how a credible climate strategy should address emissions, value chains and greenwashing.

Analytical / Application Questions

1. A distributor in a high-risk country requests a large “success fee” before a customs decision. Analyse the warning signs, controls and escalation steps a firm should apply.
2. A clothing company discovers excessive working hours at a supplier but knows immediate termination would eliminate thousands of jobs. Use stakeholder, rights and remediation perspectives to recommend a response.
3. A firm reports falling emissions intensity while total emissions rise. Explain how this can occur and assess what additional information stakeholders need.

Multiple Choice Questions with Answers

Question 1

Which statement best distinguishes ESG from sustainability?

A. ESG focuses only on environmental performance, while sustainability focuses only on profits.

B. ESG commonly emphasises measurement, governance and disclosure, while sustainability addresses long-term economic, social and ecological viability.

C. ESG is legally binding everywhere, while sustainability is never regulated.

D. ESG concerns philanthropy, while sustainability concerns bribery controls.

Correct Answer: B. ESG commonly emphasises measurement, governance and disclosure, while sustainability addresses long-term economic, social and ecological viability.

Question 2

Which action is a core element of a risk-based anti-bribery programme?

A. Using the same controls for every country and transaction

B. Allowing agents to make undocumented cash payments

C. Conducting due diligence on third parties and monitoring their activities

D. Measuring success only by the number of policies issued

Correct Answer: C. Conducting due diligence on third parties and monitoring their activities

Question 3

Why may immediate termination of a problematic supplier be insufficient as a responsible-sourcing response?

A. Termination is always illegal under international law

B. It can remove leverage and worsen conditions or income security for affected workers

C. Suppliers never influence human-rights outcomes

D. Responsible sourcing prohibits changing suppliers

Correct Answer: B. It can remove leverage and worsen conditions or income security for affected workers

Question 4

Which example represents Scope 2 emissions?

A. Fuel burned in a company-owned truck

B. Emissions from a customer using the company’s product

C. Emissions associated with electricity purchased by the company

D. Emissions from an unaffiliated competitor

Correct Answer: C. Emissions associated with electricity purchased by the company

Question 5

What does impact materiality primarily assess?

A. The effect of an issue on a firm’s share price only

B. The significance of the firm’s effects on people and the environment

C. The number of pages in a sustainability report

D. The tax rate applied to foreign subsidiaries

Correct Answer: B. The significance of the firm’s effects on people and the environment

Question 6

A company’s emissions fall from 100,000 to 90,000 tonnes while output falls from 1,000,000 to 700,000 units. What happens to emissions per unit?

A. It falls from 0.10 to approximately 0.09 tonnes per unit

B. It rises from 0.10 to approximately 0.129 tonnes per unit

C. It remains exactly 0.10 tonnes per unit

D. It becomes zero because total emissions fell

Correct Answer: B. It rises from 0.10 to approximately 0.129 tonnes per unit

Question 7

Which practice most directly supports human-rights due diligence?

A. Relying only on a supplier’s self-certification

B. Mapping risks, consulting affected stakeholders, tracking outcomes and providing remedy

C. Publishing only positive performance indicators

D. Treating all risks as equally urgent

Correct Answer: B. Mapping risks, consulting affected stakeholders, tracking outcomes and providing remedy

Question 8

What is a principal weakness of relying exclusively on ESG ratings?

A. All ratings use identical definitions and methods

B. Ratings can differ because providers use different scopes, indicators and weightings

C. Ratings cannot include governance information

D. Ratings are always based on verified worker interviews

Correct Answer: B. Ratings can differ because providers use different scopes, indicators and weightings

Question 9

Which statement about tax planning is most accurate?

A. Any reduction in tax is automatically unethical and illegal

B. Tax strategy should consider legality, economic substance, transparency and wider corporate citizenship

C. Tax has no relationship to sustainability or public services

D. Transfer pricing is never relevant to multinational accountability

Correct Answer: B. Tax strategy should consider legality, economic substance, transparency and wider corporate citizenship

Question 10

What is greenwashing?

A. Reducing emissions through operational improvements

B. Using renewable energy in a production facility

C. Making environmental claims that are misleading, unsubstantiated or incomplete

D. Disclosing uncertainty in climate data

Correct Answer: C. Making environmental claims that are misleading, unsubstantiated or incomplete