b) Quality Chemicals Ltd manufactures a chemical compound which is widely used in industrial cleaning. The compound is made from a small number of chemical products. One of these raw materials, Chemical X, is bought from a supplier in a developing country. Chemical X is scarce and is available from only a few global suppliers. In its untreated form, Chemical X is also toxic and can cause serious damage to the health of individuals who are exposed to it. It is also known that the local environment around factories that produce Chemical X are subject to extensive contamination.

A few months ago, Quality Chemicals Ltd renewed a long-term agreement with the supplier for the purchase of Chemical X. Senior management are aware of the health and environmental risks associated with Chemical X, but did not see that these had any relevance to its own business. The toxic effects of the chemical are eliminated by its treatment in the production process that Quality Chemicals uses to make its own chemical compound.

Following a major industrial accident one week ago at the main manufacturing site of the supplier of Chemical X, there has been a widespread and intensive reporting campaign in the press and television. The dangers of Chemical X have become a matter of widespread public debate, and a television program has identified Quality Chemicals as a major user of the product. An action group has been formed that seeks to ban the import of Chemical X into the country and for the closure of Quality Chemicals manufacturing sites.

The board of directors of Quality Chemicals Ltd believe that the public concern is excessive and unjustified, but the directors now recognise that they should have done much more to report on the risks from Chemical X, and the measures taken to deal with them, in their social and environmental report.

(i) Identify two key issues of social and environmental responsibility and contraventions faced

by Quality Chemicals.

2 marks

(ii) Explain three alternative courses of action that Quality Chemicals may take in response to the damaging media reports about its association with Chemical X and its social and environmental dangers.

4 marks

(iii) Explain three reasons in favour of reporting social and environmental risks in a companys

sustainability report.