L5M5 Exam Dumps | EcoWear, a well-known apparel company committed to sustainability, has recently expanded its supply chain

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Question 15/55

EcoWear, a well-known apparel company committed to sustainability, has recently expanded its supply chain but failed to address key ESG issues, leading to the following concerns:
A supplier has been reported for using toxic dyes, causing environmental harm.
Another supplier has poor labor practices, resulting in worker strikes.
If these ESG issues remain unresolved, what are the most likely consequences for EcoWear? Select any TWO.

A. Increased Sales: Consumers are likely to overlook the issues and continue purchasing EcoWear products, boosting sales

B. Legal Benefits: EcoWear could benefit from reduced regulatory scrutiny and enjoy a more favorable legal environment

C. Reputational Damage: The company may face backlash from consumers and advocacy groups, harming its brand reputation and customer loyalty

D. Inability to secure or attract potential investments from banks

Correct Answer: C,D

Choice A- Increased Sales is unlikely, as consumers are increasingly aware of ESG issues and may choose to avoid brands that don't align with their values.
Choice B- Legal Benefits is also unlikely, as failing to address ESG issues could actually increase regulatory scrutiny and legal risks.
Option C & D is the answer as per the study guide.

Reference: LO-1.1; Page 53; Impact of breaches of ethical codes or ESG standards on reputation and brand

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