A large shareholder owned furniture company known for its trendy, but low-priced merchandise has been the...

Transcribed Image Text:

A large shareholder owned furniture company known for its trendy, but low-priced merchandise has been the target of criticism for its environmental practices. For example, an article an influential newspaper called out the company for its mass-produced furniture that is both "easy to obtain (inexpensive) and abandon (not built to last)." The company's labor practices have also been called into question. Recently, the company has taken what seem to be significant steps toward becoming more socially and ecologically responsible. The company's CEO affirmed the Business Roundtable's Statement on the Purpose of a Corporation (which states that businesses should create value for all stakeholders) and has joined over 200 companies in signing "The Climate Pledge," (a pledge to achieve "Net Zero Carbon" by 2040). In addition to promising better treatment of employees and other workers in its supply chain, the company features several prominently stated environmental goals and activities on its website including aspirations to become net carbon zero, using a high percentage of sustainable materials, etc. These initiatives will be costly to implement. However, some company executives have been encouraged by various reports that seem to indicate a strong business case for creating value for multiple stakeholders. More specifically, they have become aware of surveys in which a significant percentage of "aspirational consumers" worldwide state they only buy from companies that align with their social and environmental values. Moreover, these consumers indicate they are willing to pay higher prices in order to "shop their values." Executives are also aware of the fast-growing ESG (Environment, Social & Governance) investing movement. Based on this information, some members of the executive team believe that the company will not only recoup any additional costs, but will actually increase its profits and share price through attracting customers and socially/ ecologically minded investors. Should executives continue and even expand these efforts based on the presumption that higher profit and improving society are in essential alignment? Why or why not? In other words, how strong is the business case for becoming more stakeholder/sustainability oriented? The furniture company in Question 1 features the following environmental aspirations prominently on its website, social media accounts and promotional messaging: 1) Achieve "net carbon zero" in by 2040. 2) Manufacture with 98% sustainable materials within 5 years (now at 80%). 3) A soon to launch website featuring real time monitoring and reporting of the company's progress toward its stated environmental goals. While these goals seem noble, what should we consider in determining whether they are legitimate ways to advance the goals of sustainability? Explain. A large shareholder owned furniture company known for its trendy, but low-priced merchandise has been the target of criticism for its environmental practices. For example, an article an influential newspaper called out the company for its mass-produced furniture that is both "easy to obtain (inexpensive) and abandon (not built to last)." The company's labor practices have also been called into question. Recently, the company has taken what seem to be significant steps toward becoming more socially and ecologically responsible. The company's CEO affirmed the Business Roundtable's Statement on the Purpose of a Corporation (which states that businesses should create value for all stakeholders) and has joined over 200 companies in signing "The Climate Pledge," (a pledge to achieve "Net Zero Carbon" by 2040). In addition to promising better treatment of employees and other workers in its supply chain, the company features several prominently stated environmental goals and activities on its website including aspirations to become net carbon zero, using a high percentage of sustainable materials, etc. These initiatives will be costly to implement. However, some company executives have been encouraged by various reports that seem to indicate a strong business case for creating value for multiple stakeholders. More specifically, they have become aware of surveys in which a significant percentage of "aspirational consumers" worldwide state they only buy from companies that align with their social and environmental values. Moreover, these consumers indicate they are willing to pay higher prices in order to "shop their values." Executives are also aware of the fast-growing ESG (Environment, Social & Governance) investing movement. Based on this information, some members of the executive team believe that the company will not only recoup any additional costs, but will actually increase its profits and share price through attracting customers and socially/ ecologically minded investors. Should executives continue and even expand these efforts based on the presumption that higher profit and improving society are in essential alignment? Why or why not? In other words, how strong is the business case for becoming more stakeholder/sustainability oriented? The furniture company in Question 1 features the following environmental aspirations prominently on its website, social media accounts and promotional messaging: 1) Achieve "net carbon zero" in by 2040. 2) Manufacture with 98% sustainable materials within 5 years (now at 80%). 3) A soon to launch website featuring real time monitoring and reporting of the company's progress toward its stated environmental goals. While these goals seem noble, what should we consider in determining whether they are legitimate ways to advance the goals of sustainability? Explain.

Answer rating: 100% (QA)

The executives of the furniture company have a significant opportunity to align their business strategy with social and environmental values which can potentially lead to both increased profits and po... View the full answer