Which of the following types of companies would have a good reason for being exempted from reporting on climate-related issues.

Question

BlackTom AI · Accepted Answer

When considering which types of companies might be exempted from reporting on climate-related issues, we start by evaluating the fundamental premise behind reporting requirements: material climate-related risks that could influence financial performance or decision-making.
Option A suggests that only those companies that do not face material climate-related risks would have a good reason for exemption. If a company operates in a sector or in a manner where climate risks are genuinely immaterial to its financial position, exemption could be justified because the reporting would not provide meaningful information to investors or stakeholders.
Option B claims exemptions would apply to companies lacking sufficient financial or technical resources. This reasoning is less persuasive, because reporting frameworks are designed with scalability in mind, and many reporting standards include simplified disclosures or matierality thresholds to accommodate smaller entities; lacking resources does not automatically justify exemption if material risks exist.
Option C states that both A and B are valid grounds for exemption. Since the rationale in B is weak by itself and the core purpose of reporting is to capture material risks, combining A with a problematic reason weakens the argument for exemption.
Option D asserts that none of the above are valid reasons. If there is a clear case where climate-related risks are not material for a company, then A would be a legitimate exemption ground, making D incorrect.
In summary, the strongest, policy-consistent justification among these options is that exemption is appropriate only when climate-related risks are not material to the company’s financials or operations. The remaining choices either overstate the applicability of resource limitations or conflict with the materiality principle, leading to weaker or invalid exemptions.

ACCT10001_2025_SM1 Exam: Accounting Reports and Analysis (ACCT10001_2025_SM1)- Requires Respondus LockDown Browser

Which of the following types of companies would have a good reason for being exempted from reporting on climate-related issues.

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