Page 175 - F1 - AB Integrated Workbook STUDENT 2018-19

Governance and social responsibility in business

Drawbacks include:

 loss of business value – can be seen as management acting
against their primary role of earning higher returns for investors

 maximisation of profits can be seen as socially responsible – it
benefits institutional investors (such as pension schemes) and
creates more tax revenue for governments

 increased cost of raw materials – responsibly sourced materials
are likely to be more expensive

 having to turn away business – an ethical company cannot be
seen to be trading with unethical partners

 increased management time – significant management time can
be taken up by a focus on CSR.

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