What is an example of an internal and an external social factor?

The correct response highlights health and safety as an internal social factor and social opportunities as an external social factor, effectively distinguishing between the two categories.

Health and safety are classified as internal social factors because they pertain to the policies and practices an organization implements to ensure the well-being of its employees and the work environment. This includes workplace safety measures, health regulations, and protocols that a company establishes internally to protect its workforce.

On the other hand, social opportunities represent external social factors. These pertain to the ways in which a company can positively engage with broader societal issues or needs outside of its immediate operational framework. This could involve initiatives like community development programs, contributions to social causes, or partnerships that enhance the company's social impact in the community.

This distinction is crucial in the context of sustainable investing and ESG (Environmental, Social, and Governance) considerations, as understanding the difference between internal and external factors helps organizations and investors evaluate risks and opportunities effectively across all frameworks of sustainability and responsibility in business practices.