The Board of Directors of a multinational chemical producing company are considering the final accounts for the year and are discussing the emphasis to be made in the Annual Report.

l The Financial Director claims that the main features should be the 20% increase in both the profit after tax and earnings per share plus the record dividend payout.

l The Production Director wants to highlight the massive amounts of capital expenditure this year on safety improvements at one of the chemical plants in Scotland. The plant had previously come under severe public pressure due to the potential health hazards to the local population.

l The Human Resources Director is concerned about the alarming increase in the rate of labour turnover. The trade unions claim that 20% of their workforce earn well below the European average.

l The Managing Director reminds the Board of the significant donations the company has made this year to overseas aid in the countries where they had previously been criticised for the exploitation of cheap labour.

(a) Suggest the ways in which companies are likely to experience conflicts between managing shareholders’ interests and companies’ social responsibilities. (10 marks)

(b) What might be the consequences for this company if it fails to address these issues?