What is a negative effect of social and environmental decisions on a business?

The selection of an increased wage bill as a potential negative effect of social and environmental decisions on a business highlights how commitment to ethical practices can lead to higher operational costs. When a business decides to implement socially responsible practices, it may include raising wages for employees, adopting environmentally sustainable materials, or implementing fair labor practices. While these decisions contribute positively to society and the environment, they can also result in increased expenses, particularly if the business aims to provide a living wage or improved working conditions, thereby impacting its overall profitability.

In contrast, the other considerations, such as increased sales, lower legal costs, or new markets, are typically seen as positive outcomes. Increased sales may arise from a strong brand reputation due to ethical practices, while lower legal costs may result from compliance with regulations related to social responsibility. Similarly, entering new markets could stem from appealing to consumer demand for sustainable products. Hence, the recognition of an increased wage bill underscores the financial trade-offs that can occur when a business prioritizes social and environmental responsibility.