12 Analyse how a company's poor environmental record could negatively affect its share price

[Sir Afzal Shad]

12 Analyse how a company's poor environmental record could negatively affect its share price [3]

[Shaliza khawaja]

They could face public criticism, fines, or regulatory pressure.
For example, if a manufacturing company is continuously reported for pollution, its reputation might be damaged.
If the reputation is damaged, future sales may become uncertain and it could drive away potential investors.
Fewer investors would lead to financial instability, further harming its growth opportunities.

[Subhan Zafar]

{KN}A company’s environmental record refers to how responsibly it manages its impact on the environment, such as pollution control, waste management, and resource use.
{APP}For example, a cement manufacturing company in Pakistan, such as Lucky Cement, needs to carefully manage its carbon emissions, waste disposal, and energy use to maintain a positive environmental record. If it fails to control dust pollution or dispose of waste responsibly, it could be criticised by environmental groups and the media.
{AN}This negative publicity can damage the company’s public image and make investors lose confidence, leading them to sell their shares. As investor demand falls, the share price is likely to decrease, showing how poor environmental management can directly harm both the company’s reputation and financial performance.

[Naveen fatima]

[KN] A poor environmental record can make a company look irresponsible to investors and the public.
[APP] For example, If a manufacturing company is found polluting rivers, It could face negative media attention.
[AN] Investors may lose trust and sell their shares, reducing share price. The company could also lose customers, leading to lower profits. As a result the business becomes less attractive to investors.

[Muaz Aamir]

KN: A poor environmental record means a company is seen as harming the environment, like causing pollution or wasting resources.

AP: For example, when BP had an oil spill in the Gulf of Mexico, its share price dropped a lot because people lost trust in the company.

AN: This can make investors sell their shares because they worry about bad publicity and future losses. Customers might also stop buying the company’s products, which reduces profits.

[Abdul Hadi]

KN: If a business is seen damaging the environment it will face backlash from the people resulting in reduce share price in the market.
APP: For example an oil company causing frequent oil spills may face public backlash and reduced support from the public.
AN: this can result in reduced confidence from the investors in the companies sustainability, the company can face cleanup costs, fines and lawsuits resulting in ruined reputation, the company and decreased profitability reducing the stock price and making it less attractive.

[shamaim shakeel]

Knowledge Point:
A poor environmental record can lower a company’s share price because it damages the company’s image and reduces investor confidence.

Application:
For example, if Shell is found to be polluting local areas or wasting resources, it could face public criticism and media attention.

Analysis:
This bad publicity can make customers lose trust and stop buying from the company, which will reduce sales and profits. Lower profits make the business less attractive to investors, so many might sell their shares. As more people sell, the demand for shares falls, causing the company’s share price to drop sharply.

[Uqbah hadeed kayani]

[KN]shareholders may not support poor enviormental records due to there own goals to be enviormentally friendly [APP] due to this the business would loose the vast majority of share holders that invested into the business causing the share holders to sell there shares back into the market , these shares would then decrease the costs of the existing shares as there are too many in the market [AN] this would decrease capital for the business , force them to pay the shareholders and create a negative brand image within the market for the business which may be very negatively impactful to there market share

[areeshasaber]

[kn] the business could be criticized, and be seen irresponsible.
[app] for example, an oil company could be criticized for oil spilling or wastages.
[an] this can lead to the oil company forced to pay fines, reduce sales and profits, and a bad reputation or brand image.

[sikander ali]

[KN]they would face public criticism and heavy fines from govt.
[APP]for instance a chips factory accused of polluting the environment aswell as rivers by throwing waste materials their due to which their brand image destroyed.
[AN]thus due to which if people would avoid and even boycott that brand likewise due to decreasing sales they wont be able to give dividends to the shareholders due to which they might lose them and with less capital it would be difficult to operate the business properly and would face reduced consumer base and financial loss.

[Wahaj Ashraf]

[KN] A company may be harming the environment e.g. through pollution or waste.
[APP] suppose if its a manufacturing company and is dumping waste into rivers this could lead to bad publicity and protests.
[AN]This negative image can reduce customer trust and sales and investors may see the business as risky leading them to sell shares causing the share price to fall.

[Shuraim Arif]

(KN) They could face a lot of pressure and criticism for being unethical and polluting the environment.
(APP) For example, a paint manufacturing company may not dispose off their waste properly and its smell and fumes may prove to be deadly for people who live nearby, especially if it operates in a densely populated area.
(AN) This would lead to mass boycotts of the business as many people would be concerned about the long term effects of the fumes on the population, leading to a massive dip in sales for the business, forcing it to switch objectives to survival. This would lead to the business being forced to lower its share price as no one would want to buy its shares due to the criticism the business is facing.

[Tuqwa]

kn:a poor environmental record can harm a company’s public image and investor confidence.
app:Forexample if a company is fined for pollution or waste dumping customers may boycott its products and investors may view it as a risky or unethical business.
an:this can reduce demand for its shares and cause the share price to fall due to loss of trust and lower future profits.

[Ayaan Fayaaz]

[Kn] A poor environmental record can damage a company’s reputation and public image.

[App] For example, if an oil company is linked to pollution or oil spills, investors may lose confidence in it.

[An]This can reduce customer trust and sales lead to negative media coverage and public backlash and cause investors to sell their shares, lowering the company’s share price

[EmmanWaseem]

It may increase the cost
If there are damages due to floods which creates the poor environment the cost may go into repair or creating improvement after the flood,there may not be enough money for share prices
This can lead to less share price which leads to higher costs