Many policymakers adopt macro approach to environmental problems

Question

Many policymakers adopt macro approach to environmental problems in emerging markets (countries experiencing rapid economic growth): discussing ambitious regulations in global forums and looking to giant multinational companies and non-governmental organizations (NGOs) for insight. But examining what successful companies in these countries are already doing to make growth more environmentally sustainable may make more sense.

One study identifies several such firms that are turning eco-consciousness into a source of competitive advantage. The most salient quality of these highly profitable companies is that they turn limitations (of resources, labor, and infrastructure) into opportunities. An Indian cement company suffering water shortages developed the world's most water-efficient cement-making method, using air cooling rather than water cooling. A Philippine utility reduced its water loss through wastage and illegal tapping from 63% (1997) to 12% (2010) by making water more affordable for low-income consumers. A Chinese company makes air conditioners powered with buildings waste heat, reducing strain on the electric grid.

The companies also seek to shape their business environment to support sustainable objectives. Some lobby regulators: a Brazilian organic-sugar producer works with Brazil's government to establish an organic certification system. Some form partnerships: Kenya's Equity Bank allies with international groups to reduce its risks when lending to smallholders or single-family farms; a Brazilian cosmetics company works with suppliers to produce sustainable packaging. Some firms also work to reach and educate lower-income consumers, sacrificing short term profits to create future markets: a Chilean forest tree company organizes local carpenters into networks and connects them to low-income customers.

One could quibble with the study. Switzerland's Phil Rosenzweig has argued that management writers are prone to  a halo effect : they treat the company's temporary success as proof that it has discovered some eternal principle of good management. That some successful companies have embraced environmental sustainability does not prove that it makes companies successful. Some firms, having prospered, can afford to splurge on green initiatives; some pursue eco-initiatives for public-relations purposes.

Nonetheless, the study is thought-provoking. Critics argue that environmentalism is a rich-world luxury, but such fears are overblown. When natural resources are scarce and consumers are cash-strapped. Sustainability can be a lucrative business strategy.    1 
 Q1. It can most reasonably be inferred from the passage that multinational companies

(A) are more likely to be financially successful in emerging nations if they ally themselves with local businesses that are using environmental sustainability initiatives to drive growth. 
(B) are less prone to the problems associated with the Halo effect than are companies based only in one nation.
(C) are increasingly likely to buy out emerging-nation companies that have successfully developed and implemented environmental sustainability initiatives. 
(D) are usually able to implement large-scale environmental sustainability initiatives only after they have achieved a certain level of profitability. 
(E) tend to develop environmental sustainability initiatives that differ significantly from those that have been successfully and more easily implemented by smaller companies in the emerging world.

2 
 Q2. The primary purpose of the passage is to

(A) assess the likelihood that the adoption of environmental sustainability initiatives identified in a study will help businesses in emerging markets become profitable
(B) justify a study's assertion that policymaker's typical approach to environmental problems in emerging markets has been ineffective
(C) question ways in which businesses in emerging markets can emulate each other's successful environmental sustainability initiatives
(D) cite examples from a study of emerging markets to suggest that businesses can engage in and benefit from environmental sustainability initiatives 
(E) evaluate several businesses in emerging markets that have successfully implemented environmental sustainability initiatives

3 
 Q3. Which of the following claims about profits does the passage indicate is most likely to be supported by at least some eco-conscious companies in emerging markets?

(A) A company that makes consistently high profits has less motivation to implement environmental sustainability initiatives than does a company that is not as profitable. 
(B) Emulating multinational companies' environmental sustainability initiatives will most likely result in lower profits that can be obtained otherwise. 
(C) Participating in global forums on environmental sustainability can most likely increase a company's profit. 
(D) It is necessary to forgo some profits in order to pay for resources of sufficient quality to produce premium goods. 
(E) Environmental sustainability initiatives that fail to yield profits immediately may nevertheless be in a company's best interest to implement.

4 
 Q4. The information in the passage suggests that its author believes there may be "a halo effect" (see highlighted text) associated with which of the following errors?

(A) A company's profitable implementation of sustainable practices is mistakenly attributed to altruistic motives.
(B) the apparent association of a company's adoption of sustainability initiatives with its need to address resource limitations is mistaken for causation. 
(C) a company's financial success is mistakenly attributed to the positive qualities of those who make the management decisions at that company. 
(D) the financially successful strategies of some companies are mistaken to imply that a larger group of companies will be similarly successful if they adopt similar strategies.
(E) the positive environmental impact of a company's adoption of sustainable practices is mistakenly understood to offset a greater negative environmental impact that it actually does.

KarishmaB · Accepted Answer

Question 1.

Q1. It can most reasonably be inferred from the passage that multinational companies

(A) are more likely to be financially successful in emerging nations if they ally themselves with local businesses that are using environmental sustainability initiatives to drive growth. 
(B) are less prone to the problems associated with the Halo effect than are companies based only in one nation.
(C) are increasingly likely to buy out emerging-nation companies that have successfully developed and implemented environmental sustainability initiatives. 
(D) are usually able to implement large-scale environmental sustainability initiatives only after they have achieved a certain level of profitability. 
(E) tend to develop environmental sustainability initiatives that differ significantly from those that have been successfully and more easily implemented by smaller companies in the emerging world.

Multinational companies have been mentioned in the passage only once: in the first paragraph

Many policymakers ... look to giant multinational companies and NGOs for insight on environmental policies for emerging markets. But examining what successful companies in these countries are already doing to make growth more environmentally sustainable may make more sense.

What does this imply? Don't try to take insights from multinationals. Look at what companies in these countries are already doing. That will help. And then the author goes on to give examples in paragraph 2.

Hence what can we infer of the given 5 options? Only (E)
Environmental sustainability initiatives at multinationals differ significantly from those that have been successfully and more easily implemented by smaller companies in the emerging world.

There is absolutely no mention of any other connect to multinationals in the passage.

Answer (E)

Question 2.

Q2. The primary purpose of the passage is to

(A) assess the likelihood that the adoption of environmental sustainability initiatives identified in a study will help businesses in emerging markets become profitable
(B) justify a study's assertion that policymaker's typical approach to environmental problems in emerging markets has been ineffective
(C) question ways in which businesses in emerging markets can emulate each other's successful environmental sustainability initiatives
(D) cite examples from a study of emerging markets to suggest that businesses can engage in and benefit from environmental sustainability initiatives 
(E) evaluate several businesses in emerging markets that have successfully implemented environmental sustainability initiatives

After all the examples, the author makes his point in the last paragraph:
 Nonetheless, the study is thought-provoking. Critics argue that environmentalism is a rich-world luxury, but such fears are overblown. When natural resources are scarce and consumers are cash strapped, sustainability can be lucrative business strategy.

He says sustainability is not a luxury; in fact it can be a lucrative business strategy. That is, sustainability can make a successful business.

Hence (D) is correct.

Question 3.

Q3. Which of the following claims about profits does the passage indicate is most likely to be supported by at least some eco-conscious companies in emerging markets?

(A) A company that makes consistently high profits has less motivation to implement environmental sustainability initiatives than does a company that is not as profitable. 
(B) Emulating multinational companies' environmental sustainability initiatives will most likely result in lower profits that can be obtained otherwise. 
(C) Participating in global forums on environmental sustainability can most likely increase a company's profit. 
(D) It is necessary to forgo some profits in order to pay for resources of sufficient quality to produce premium goods. 
(E) Environmental sustainability initiatives that fail to yield profits immediately may nevertheless be in a company's best interest to implement.

Look at the third paragraph:
 Some firms also work to reach and educate lower-income consumers, sacrificing short term profits to create future markets: a Chilean forest tree company organizes local carpenters into networks and connects them to low income customers.

Hence, option (E) is supported by at least some eco-conscious companies in emerging markets.
The other options are not discussed.

Question 4.

Q4. The information in the passage suggests that its author believes there may be "a halo effect" (see highlighted text) associated with which of the following errors?

(A) A company's profitable implementation of sustainable practices is mistakenly attributed to altruistic motives.
(B)  the apparent association of a company's adoption of sustainability initiatives with its need to address resource limitations is mistaken for causation. 
(C)  a company's financial success is mistakenly attributed to the positive qualities of those who make the management decisions at that company. 
(D) the financially successful strategies of some companies are mistaken to imply that a larger group of companies will be similarly successful if they adopt similar strategies.
(E) the positive environmental impact of a company's adoption of sustainable practices is mistakenly understood to offset a greater negative environmental impact that it actually does.

What do we know about the halo effect?
 a halo effect : they treat the company's temporary success as proof that it has discovered some eternal principle of good management. That some successful companies have embraced environmental sustainability does not prove that it makes companies successful.

(D) the financially successful strategies of some companies are mistaken to imply that a larger group of companies will be similarly successful if they adopt similar strategies.

We are given what the halo effect is. That some successful companies have embraced environmental sustainability does not prove that it makes companies successful. Hence, the mistake would be to assume that the other companies will be able to adopt similar strategies to become financially successful too.

​​​​​​​Answer (D)

Sajjad1994 · Answer

Explanation

Q3. Which of the following claims about profits does the passage indicate is most likely to be supported by at least some eco-conscious companies in emerging markets?

Explanation

(A)  The passage does not state that a consistently high-profit company has less motivation to implement environmental sustainability initiatives. In fact, the examples in the passage suggest that successful companies are motivated to adopt such initiatives, turning limitations into opportunities.

(B)  The passage does not suggest that emulating multinational companies' environmental sustainability initiatives will likely result in lower profits. On the contrary, the examples provided highlight how successful companies in emerging markets use eco-consciousness as a source of competitive advantage.

(C)  The passage does not focus on the participation in global forums as a direct factor influencing a company's profit. The emphasis is on the actions taken by successful companies within their local contexts.

(D)  The passage does not specifically address the necessity of forgoing profits to pay for resources of sufficient quality to produce premium goods. It focuses more on how successful companies turn limitations into opportunities and create competitive advantages through eco-conscious strategies.

(E)   The passage supports the idea that environmental sustainability initiatives that may not yield immediate profits can still be in a company's best interest to implement. Examples are given of companies sacrificing short-term profits to create future markets and achieve long-term success.

Answer: E

Sajjad1994 · Answer

Explanation

Q2. The primary purpose of the passage is to

Explanation

A  is partially aligned with the passage. The passage indeed discusses how certain businesses in emerging markets have turned environmental limitations into opportunities and have become highly profitable as a result. However, the passage does not explicitly assess the likelihood of these initiatives helping other businesses in emerging markets become profitable. It focuses more on presenting examples of successful initiatives rather than directly assessing their potential profitability for other businesses.

B.  While the passage suggests that policymakers often adopt a macro approach to environmental problems in emerging markets, it does not explicitly justify a study's assertion regarding the ineffectiveness of this approach. Instead, it presents examples of successful environmental initiatives by businesses in emerging markets, implying that there are alternative approaches that can be effective.

C.  is not aligned with the main purpose of the passage. Rather than questioning how businesses can emulate each other's initiatives, the passage focuses on presenting examples of successful initiatives and suggesting that policymakers and other businesses can learn from them.

D.   accurately captures the main purpose of the passage. The passage cites examples from a study of businesses in emerging markets to demonstrate that they can engage in and benefit from environmental sustainability initiatives. It highlights how these initiatives have turned limitations into opportunities and have led to competitive advantages and profitability for the businesses involved.

E.  While the passage does evaluate several businesses in emerging markets that have successfully implemented environmental sustainability initiatives, the primary purpose is broader. It aims to suggest that businesses can engage in and benefit from such initiatives, rather than solely evaluating the businesses themselves.

Answer: D

JJ.jj · Answer

can someone please explain why D is incorrect for Q1?

Sajjad1994 · Answer

This is a hard question, and  (D)  is very tricky. The passage discusses successful companies in emerging markets implementing sustainability initiatives without explicitly stating that these initiatives are implemented  only after achieving a certain level of profitability.  Instead, the passage highlights how companies leverage sustainability initiatives to drive growth and gain competitive advantage, suggesting that profitability and sustainability efforts may be intertwined rather than sequential.  (D)  is half right and half wrong.

lily123400 · Answer

Hello, can someone expand into question 4 more?
I initially picked answer choice C: a company's financial success is mistakenly attributed to the positive qualities of those who make the management decisions at the company
I chose that because it says: "treat a company's temporary success as proof it has discovered some eternal principle of good management."

I suppose temporary success doesn't equal financial success. Would that be the reason C is not considered?

mrpiyush21 · Answer

Can someone explain why answer is D not C for Q4 - Halo Effect ?

GMATNinja · Answer

Question 4

Here's a chunk of the passage again:

The passage describes companies that have achieved some success by embracing sustainability. The management writers look at those successful examples and conclude that embracing sustainability is good for business.

But that  temporary  success may not last. Also, just because SOME companies have achieved success by embracing sustainability does not necessarily mean that all (or even most) companies will experience similar results.

The halo effect, as described in the passage, is looking at a limited set of data (the companies that have experienced success by embracing sustainability) and concluding that embracing sustainability is an "eternal principle of good management". In other words, they conclude that embracing sustainability will be good for any business, and that's what (D) says: what worked for a small group of companies should work for a larger group of companies.

(C) is out because there's nothing in the passage about attributing the success of companies to the   positive qualities of the people  who make the management decisions .

I hope that helps!

Pranavsawant · Answer

In option C, when we say "questioning", does it mean contemplating or questioning the credibility of the assertion?

mkeshri185 · Answer

In the Halo effect setion the passgae doesn't talk about financially successful companies, it merely talk about successful companies so how can D be correct? I rejected C and D on this basis itself.

GMATNinja · Answer

Question 2 
 
If something is being questioned, then there's at least some level of doubt about the truth or accuracy of that thing. There might be tiny bit of doubt or a high level of doubt, so the exact definition of the verb "to question" will depend largely on the context.

But the level of doubt doesn't really matter when analyzing choice (B). The passage doesn't discuss   ways   in which businesses in emerging markets can emulate each other's successful environmental sustainability initiatives. The   ways   are not mentioned and are certainly not questioned by the author, so (B) cannot represent the primary purpose.

In the fourth paragraph, the author does refer to what could be described as "questioning" of the study and admits that the study doesn't necessarily prove that sustainability can be a lucrative business strategy. But the author didn't write this passage primarily to discuss the limitations of the study (the use of the word "quibble" suggests that the author thinks those limitations are relatively minor).

More importantly, questioning the study and its implications is very different than questioning specific WAYS in which businesses in emerging markets can emulate each other's successful environmental sustainability initiative.

So even if you give the verb "question" a very broad definition, there's no way that (B) can work.

GMATNinja · Answer

Question 4 You're right to say that paragraph 4 doesn't specifically define "success" as financial success, but there are clues from earlier in the passage. Here's the final sentence of paragraph 1 along with the first sentence of paragraph 2: "... examining what successful companies in these countries are already doing to make growth more environmentally sustainable may make more sense. One study identifies several such firms that are turning eco-consciousness into a source of competitive advantage. The most salient quality of these highly profitable companies is that they turn limitations (of resources, labor, and infrastructure) into opportunities." The author cites the study as an example of examining what successful companies are doing, so we can infer that the "highly profitable companies" (that is, financially successful companies) are in fact "successful" companies. Even if there are other types of success besides financial success, that certainly doesn't mean that financially successful companies should NOT be classified as successful companies. So even if the halo effect is meant to encompass ALL types of success, financial success can still be used as an example of the halo effect. And if there's any doubt left, notice that the wording of the question allows for some wiggle room: ''The information in the passage suggests that its author believes...". So we don't need something that is provable beyond all doubt or stated explicitly in the passage. For more on question 4, check out this post: https://gmatclub.com/forum/many-policym ... l#p3604149.

jonazx44 · Answer

What is wrong with answer A for q4? a company doing environmental initiatives could be doing it for public relations, as stated in the passage, rather than altruism.

miag · Answer

Hi,

You are right that this is mentioned in the last sentence of the passage, and great that you noticed that there. But what the question is really testing: the specific error tied to the  halo effect .

So, for the purpose of answering this question, that's the part we are concerned with particularly this part of the passage: 
 " ..t hey treat the company's temporary success as proof that it has discovered some eternal principle of good management.  That some successful companies have embraced environmental sustainability does not prove that it makes companies successful."

So, this implies that author is referring to halo effect as the misattribution of success wherein just because some strategies worked for some companies does not imply that it will make others who adopt these successful too. This is exactly what D) says.

Hope this helps!

Borrat · Answer

1 Policymakers go macro/global + ask MNCs/NGOs; author says: look at what successful local firms already do.

2 Study: profitable emerging-market firms turn constraints into eco-innovation → competitive advantage (examples).

3 They also shape the ecosystem: lobby, partner, educate/build low-income markets (short-term sacrifice).

4 Caveat: halo effect / correlation ≠ causation; green could be after success or PR.

5 Bottom line: sustainability isn’t rich-world luxury; scarcity + tight budgets can make it profitable.

Q1. It can most reasonably be inferred from the passage that multinational companies

(A) are more likely to be financially successful in emerging nations if they ally themselves with local businesses that are using environmental sustainability initiatives to drive growth.
X No mention of alliances or effect on MNC success.

(B) are less prone to the problems associated with the Halo effect than are companies based only in one nation.
X Halo effect critique is about observers/writers, not MNC vs domestic comparison.

(C) are increasingly likely to buy out emerging-nation companies that have successfully developed and implemented environmental sustainability initiatives.
X No buyouts/mergers discussed.

(D) are usually able to implement large-scale environmental sustainability initiatives only after they have achieved a certain level of profitability.
X “Some firms” can afford green after prospering ≠ “multinationals usually” and not “only after.”

(E) tend to develop environmental sustainability initiatives that differ significantly from those that have been successfully and more easily implemented by smaller companies in the emerging world.
✔ Implied by the contrast: policymakers look to MNCs, but study suggests local constraint-driven approaches make more sense.

Q2. The primary purpose of the passage is to

(A) assess the likelihood that the adoption of environmental sustainability initiatives identified in a study will help businesses in emerging markets become profitable
X No probability/likelihood assessment; author explicitly cautions against causation claims.

(B) justify a study's assertion that policymaker's typical approach to environmental problems in emerging markets has been ineffective
X Doesn’t claim “ineffective,” just suggests an alternative focus.

(C) question ways in which businesses in emerging markets can emulate each other's successful environmental sustainability initiatives
X Not questioning emulation; mainly presenting study + takeaway.

(D) cite examples from a study of emerging markets to suggest that businesses can engage in and benefit from environmental sustainability initiatives
✔ Exactly: examples + mechanisms, with a caveat, ending in qualified support.

(E) evaluate several businesses in emerging markets that have successfully implemented environmental sustainability initiatives
X Not evaluating firms individually; using them as illustrations.

Q3. Which of the following claims about profits does the passage indicate is most likely to be supported by at least some eco-conscious companies in emerging markets?

(A) A company that makes consistently high profits has less motivation to implement environmental sustainability initiatives than does a company that is not as profitable.
(B) Emulating multinational companies' environmental sustainability initiatives will most likely result in lower profits that can be obtained otherwise.
(C) Participating in global forums on environmental sustainability can most likely increase a company's profit.
(D) It is necessary to forgo some profits in order to pay for resources of sufficient quality to produce premium goods.-- passage says some firms educate/reach lower-income consumers, sacrificing short-term profits to create future markets
(E) Environmental sustainability initiatives that fail to yield profits immediately may nevertheless be in a company's best interest to implement.

Borrat · Answer

Q1. It can most reasonably be inferred from the passage that multinational companies

--  i assume this is based on the first paragraph only and the contrast "but"

(A) are more likely to be financially successful in emerging nations if they ally themselves with local businesses that are using environmental sustainability initiatives to drive growth. --  ally is a speculation, ally is mentioned in 3rd para for those smaller companies, so its not tied to the multinationals 
(B) are less prone to the problems associated with the Halo effect than are companies based only in one nation. --  unsubstantiated comparison, where do they say this ? the halo effect is never tied to multinationals 
(C) are increasingly likely to buy out emerging-nation companies that have successfully developed and implemented environmental sustainability initiatives. --  buy out ? speculation, completely invented 
(D) are usually able to implement large-scale environmental sustainability initiatives only after they have achieved a certain level of profitability. --  where is this mentioned? speculation, for all we know these multinational corporations could be operating at a loss 
(E) tend to develop environmental sustainability initiatives that differ significantly from those that have been successfully and more easily implemented by smaller companies in the emerging world. --  i think this is implied by the contrast marker of the author, she says hey, instead look at what these people are doing with constrained resources..

Q2. The primary purpose of the passage is to

(A) assess the likelihood that the adoption of environmental sustainability initiatives identified in a study will help businesses in emerging markets become profitable --  is she measuring the probability of the examples she gives?   she isn't assessing the likelihood, this is half right.  
(B) justify a study's assertion that policymaker's typical approach to environmental problems in emerging markets has been ineffective --  if anything this seems too narrow, she also doesn't return to this opinion in the end, so this isnt the primary purpose,   if this was it you would expect her to circle back to this point
 (C) question ways in which businesses in emerging markets can emulate each other's successful environmental sustainability initiatives --  wrong direction, if anything she is exhorting, or is positive about this 
(D) cite examples from a study of emerging markets to suggest that businesses can engage in and benefit from environmental sustainability initiatives -- yes
(E) evaluate several businesses in emerging markets that have successfully implemented environmental sustainability initiatives --  first of all i dont think she is evaluating them, i think she is positive about these , and if anything this is half the picture because she has also mentioned critics and her own opinion about sustainable practices.

Q3. Which of the following claims about profits does the passage indicate is most likely to be supported by at least some eco-conscious companies in emerging markets?

(A) A company that makes consistently high profits has less motivation to implement environmental sustainability initiatives than does a company that is not as profitable. --  the whole passage is about profits while using sustainable practices , so this is a speculation, or an unsupported comparison 
(B) Emulating multinational companies' environmental sustainability initiatives will most likely result in lower profits that can be obtained otherwise. --  speculation, ad if anythig is wrog because authors tone implies these local groups are more successful 
(C) Participating in global forums on environmental sustainability can most likely increase a company's profit. --  speculation, global forums are where policymakers participate , not companies 
(D) It is necessary to forgo some profits in order to pay for resources of sufficient quality to produce premium goods. -  -necessary ? 
(E) Environmental sustainability initiatives that fail to yield profits immediately may nevertheless be in a company's best interest to implement. --  yes educate example

Q4. The information in the passage suggests that its author believes there may be "a halo effect" (see highlighted text) associated with which of the following errors?

(A) A company's profitable implementation of sustainable practices is mistakenly attributed to altruistic motives. --  altruism is different to sustainable practices. frameshift 
(B) the apparent association of a company's adoption of sustainability initiatives with its need to address resource limitations is mistaken for causation. --  the halo is about success and sust. practices. this mentions resource limitations. 
(C) a company's financial success is mistakenly attributed to the positive qualities of those   who make the management decisions at that company  . --  wrong/speculation 
(D) the financially successful strategies of some companies are mistaken to imply that a larger group of companies will be similarly successful if they adopt similar strategies.
(E) the positive environmental impact of a company's adoption of sustainable practices is mistakenly understood to offset a greater negative environmental impact that it actually does. --  unsopported comparison

Many policymakers adopt macro approach to environmental problems

Prep Toolkit

Top 5 GMAT Debrief Videos

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards

GMAT Reading Comprehension (RC) Questions

Many policymakers adopt macro approach to environmental problems

Prep Toolkit

615 to 715 in 15 Days (Ria's Strategies)

More than Quant/Verbal Abilities: Speed vs. Accuracy

745 with Only Self-Prep and GMAT Club

From 555 to 765: 210-point Improvement

Perfect 805 Score Debrief by Julia

My Rewards