Understanding Business Ethics 2nd edition by Stanwick Peter A. Stanwick Sarah D Test Bank

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Chapter 8
Ethics and the Environment

Multiple Choice Questions

1. In the opening case, which of the following companies opposed the Kyoto environmental sustainability accord and disputes that fossil fuels are the main cause of global warming?
a. Exxon
b. Chevron
c. Royal Dutch/Shell
d. Chevron

2. According to the opening case, Exxons profit was the highest in ____________.,
a. 2005
b. 2007
c. 2009
d. 2011

3. The roots of the tragedy of the commons concepts go back to ____________, who stated that what is common to most people will receive the least amount of care.
a. Friedman
b. Aristotle
c. Socrates
d. Kant

4. The underlying belief of the _______________ is that free access with unrestricted use of any resource that is finite will ultimately ruin the resource through overexploitation.
a. tragedy of the commons
b. tragedy of the benefits
c. tragedy of the differentials
d. tragedy of the failures

5. _____________ refutes the benefits of Adam Smiths invisible hand by arguing that the self-interests of each individual do not always translate into the promotion of the public good for everyone.
a. Milton Friedman
b. Michael Porter
c. Garrett Hardin
d. Henry Sidgwick

6. Under a(n) _______________ strategy, waste products are considered to be an inefficient use of resources.
a. environmental cost leadership
b. ecobranding
c. ecoefficiency
d. beyond compliance leadership

7. In the __________________ strategic focus, the firm makes a conscious effort to acknowledge the demands of its stakeholders and is able to provide proof to their stakeholders pertaining to their commitment to the natural environment.
a. environmental cost leadership
b. ecobranding
c. ecoefficiency
d. beyond compliance leadership

8. In the ________________ strategic focus, firms use their proactive environmental commitments in an attempt to differentiate their products and services for their customers and also allows potential customers to consider the natural environment when they are purchasing products and services.
a. environmental cost leadership
b. ecobranding
c. ecoefficiency
d. beyond compliance leadership

9. According to the text, an example of a company that has embraced ecobranding to its fullest is _______________.
a. Dell Computers
b. Timberland
c. General Electric
d. Google

10. In which of the following strategic focus does the firm embrace proactive environmental ideals as long as they can help reduce the overall cost of production?
a. environmental cost leadership
b. ecobranding
c. ecoefficiency
d. beyond compliance leadership

11. The U.S. Environmental Protection Agency levied its largest civil administrative penalty against ____________ for hiding information about the dangers caused by one of the chemicals, perfluorooctanoic acid, used to make Teflon.
a. General Electric
b. Dupont
c. Pfizer
d. Goodyear

12. With membership of 1.3 million, ______________ is the oldest and largest environmental group in the United States.
a. the Sierra Club
b. the Environmental Defense Fund
c. Greenpeace
d. Friends of the Earth

13. _____________, as defined by the EPA, is a periodic, objective, and documented assessment of an organizations operations compared to the audit criteria.
a. Strategic auditing
b. Operational auditing
c. Ethical auditing
d. Environmental auditing

14. _______________ can be defined as the systematic equal allocation of environmental benefits and burdens.
a. Environmental auditing
b. Ethical justice
c. Environmental justice
d. Environmental accounting

15. All of the following represent the major components needed to define sustainability EXCEPT:
a. a system to ensure the sustainable management of the earths natural resources
b. the development of social and institutional structures that would support the sustainable management of the natural resources
c. changes in the economic framework to support the sustainable management of the earths natural resources
d. all of the selections represent major components needed to define sustainability

16. According to the text, which of the following is NOT one of the three types of economies based on a countrys stage of economic development?
a. survival
b. emerging
c. developed
d. overdeveloped

17. The _______________ was created in December 1997 with the aim of having every industrialized nation in the world voluntarily reduce the level of greenhouse gas (GHG) emissions into the atmosphere by 5.2 percent as compared with 1990 GHG emissions levels.
a. Sarbanes-Oxley Act
b. Environmental Defense Fund
c. Kyoto Treaty
d. Equator Principles

18. Which of the following is NOT considered to be one of the six greenhouse gases?
a. carbon dioxide
b. hydrogen peroxide
c. nitrous oxide
d. methane

19. According to the text, the majority of greenhouse gases originate from _____________.
a. carbon dioxide
b. hydrogen peroxide
c. nitrous oxide
d. methane

20. All of the following represent types of risk for a firm due to the impact of climate change EXCEPT:
a. regulatory risk
b. employee risk
c. physical
d. litigation risk

21. ______________ is based on the belief that as the climate change continues to impact the global environment, governments from around the world adapt stronger and more rigid regulations to control GHG emissions.
a. Regulatory risk
b. Supply chain risk
c. Physical
d. Litigation risk

22. The assumption that as climate change continues to impact the world, the vulnerability of suppliers and the raw materials needed for manufacturing will decrease is called _____________.
a. regulatory risk
b. supply chain risk
c. physical
d. litigation risk

23. Which of the following types of risk is based on the premise that firms with high GHG emission levels will be threatened more frequently with lawsuits similar to those established in the tobacco, pharmaceutical and asbestos industries?
a. regulatory risk
b. supply chain risk
c. physical
d. litigation risk

24. ______________ is related to how the customer perceives the firm.
a. Reputational risk
b. Supply chain risk
c. Physical
d. Litigation risk

25. Which of the following types of risk relates to how changes in climate result in weather disasters such as droughts, floods, storms and rising sea levels?
a. regulatory risk
b. supply chain risk
c. physical
d. litigation risk

True/False Questions

26. From a natural environment context, the tragedy of the commons would predict the eventual use of all the natural resources on Earth due to the lack of control over their use.
a. True
b. False

27. An example of a company that has embraced ecobranding to its fullest is Timberland.
a. True
b. False

28. Firms with an ecobranding strategic focus would concentrate on radical product innovation such as material substitution and/or using fewer materials to yield cost savings.
a. True
b. False

29. The U.S. Environmental Protection Agency levied its largest civil administrative penalty against DuPont in 2005.
a. True
b. False

30. Greenpeace is the oldest and largest environmental group in the United States.
a. True
b. False

31. Greenpeace has 2.8 million supporters globally.
a. True
b. False

32. Research conducted by Stanwick and Stanwick found that there was no relationship between a firms environmental disclosures and its financial performance.
a. True
b. False

33. An environmental audit will allow management one measure of ensuring that they are in compliance with environmental regulations.
a. True
b. False

34. Environmental justice can be defined as the systematic equal allocation of environmental benefits and burdens.
a. True
b. False

35. Environmental sustainability is the ability of an organization or a country to protect the use of future resources by properly maintaining and protecting the resources that are currently being used.
a. True
b. False

36. The Equator Principles was created in December 1997 with the aim of having every industrialized nation in the world voluntarily reduce the level of greenhouse gas emissions (GHG) into the atmosphere by 5.2 percent as compared with 1990 GHG emission levels.
a. True
b. False

37. Process improvement focuses on adjusting the manufacturing process so it has less of an impact on climate change.
a. True
b. False

38. Supply chain risk is based on the belief that as the climate change continues to impact the global environment, governments around the world adopt stronger and more rigid regulations to control GHG emissions.
a. True
b. False

39. Regulatory risk is based on the assumption that as climate change continues to impact the world, the vulnerability of suppliers and the raw materials needed for manufacturing will decrease.
a. True
b. False

40. The firms carbon footprint is based on the total amount of GHG emissions that are a direct result of the firms operations.
a. True
b. False

Essay Questions

41. In a short essay, explain the concept of the Tragedy of the Commons.

The underlying belief of the tragedy of the commons is that free access with unrestricted use of any resource that is finite will ultimately ruin the resource through overexploitation. From a natural environment context, the tragedy of the commons would predict the eventual use of all the natural resources on Earth due to the lack of control over their use.

42. In a short essay, discuss the strategic focus of (a) Ecoefficiency, (b) Beyond Compliance Leadership, (c) Ecobranding, (d) Environmental Cost Leadership.

a. Ecoefficiency in this strategic focus, productivity is the key element for companies to gain an environmentally competitive advantage
b. Beyond Compliance Leadership in this strategic focus, firms are able to provide proof to their stakeholders pertaining to their commitment to the natural environment
c. Ecobranding in this strategic focus, firms use their proactive environmental commitments in an attempt to differentiate their products and service for their customers. Ecobranding allows potential customers to consider the natural environment when they are purchasing products and services.
d. Environmental Cost Leadership in this strategic focus, firms that compete on low price can offset their environmental investments. Firms that use this strategy embrace proactive environmental ideals as long as they can help reduce the overall costs of production.

43. In a short essay, list at least seven of the 13 areas in which environmentally proactive firms should address environmental issues.

a. Release an environmental policy that is available for all stakeholders to review
b. Establish specific targets to be measured for annual environmental performance benchmarks
c. Publish an annual environmental report
d. Implement an environmental management system
e. Use environmental criteria when making purchasing decisions
f. Provide employees with environmental training
g. Make the employees accountable and responsible for the overall environmental performance of the company
h. Use life cycle analysis that evaluates the environmental impact of a product from its creation until it is no longer in use
i. Have top-level managers who understand and attempt to address the issues of sustainable development
j. Implement a system to try to reduce the level of fossil fuel use
k. Implement a system to reduce toxic chemical use
l. Implement a system to reduce the use of unsustainable products
m. Ensure that the same environmental standards are consistent globally

44. In a short essay, list and discuss the four environmental accounting tricks that company may use to overstate earnings and understate losses related to environmental issues.

a. Lowballing superfund liabilities companies may delay remediation expenses by drawing out litigation related to the Superfund sites
b. Hiding asbestos liability some companies try to manage earnings by minimizing the impact of asbestos claim liabilities on their balance sheets
c. Painting a rosy picture some companies neglect to identify their environmental problems in their corporate disclosures, even though the SEC requires these types of disclosures
d. Underreporting environmental legal proceedings even though required by the SEC, many companies are failing to report environmental legal proceedings that are initiated or contemplated by an environmental agency that would results in monetary sanctions of more than $100,000.

45. In a short essay, list and discuss the five types of risks a firm encounters due to the impact of climate change.

a. Regulatory risk based on the belief that as the climate change continues to impact the global environment, government from around the world adapt stronger and more rigid regulations to control GHG emissions
b. Supply chain risk based on the assumption that as climate change continues to impact the world, the vulnerability of suppliers and the raw materials needed for manufacturing will decrease
c. Litigation risk based on the premise that firms with high GHG emission levels will be threatened more frequently with lawsuits similar to those established in the tobacco, pharmaceutical and asbestos industries
d. Reputational risk related to how the customer perceives the firm. If the reputation and image of the firm is negative due to its high level of GHG emissions, it could reduce or eliminate the firms competitive advantage in the market place.
e. Physical risk relates to how changes in climate result in weather disasters such as droughts, floods, storms and rising sea levels

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