Climate Change & Int Coop: CSR

Question 1

What is CSR?

Answer 1

A business approach that contributes to sustainable development by delivering economic, social and environmental benefits to stakeholders

Question 2

Draw a diagram to illustrate optimal investment in CSR

Answer 2

[See “Optimal level of investment in CSR” on your diagram sheet]

Question 3

What is the optimal level of CSR?

What happens if firms overcommit and go above this level?

Answer 3

The level at which the MC of investing in green solutions = MB of investing in green solutions

The firm is over-investing and therefore may be pushed out of the market

Question 4

Outline 2 problems with CSR

Answer 4

Inconsistency of consumer preferences

“Trend leaders” may find CSR easier to implement than others

Question 5

Explain the problem with “inconsistency of consumer preferences” in terms of CSR

Answer 5

Consumers might signal demand for more expensive greener solutions, but then refuse to pay the increased price once the improved product is made available