Source 1: A new company policy on corporate social responsibility (CSR) states that all suppliers must adhere to strict environmental standards and fair labor practices. Source 2: An internal audit report reveals that 30% of current suppliers are located in countries with weak environmental regulations, and 20% have been flagged for potential labor rights issues in the past five years. Which of the following is the most immediate challenge Company Z will face in implementing its new CSR policy?

The correct answer to the question "Source 1: A new company policy on corporate social responsibility (CSR) states that all suppliers must adhere to strict environmental standards and fair labor practices. Source 2: An internal audit report reveals that 30% of current suppliers are located in countries with weak environmental regulations, and 20% have been flagged for potential labor rights issues in the past five years. Which of the following is the most immediate challenge Company Z will face in implementing its new CSR policy?" is Option C: Potential disruption to the supply chain if non-compliant suppliers are terminated..

The other options — A) Increased operational costs due to switching to new suppliers., B) Difficulty in monitoring compliance of international suppliers., D) Negative public relations if current supplier issues become public. — are incorrect for this GMAT Exam Prep question. As explained above: The audit report shows a significant portion of current suppliers (30% + potentially 20%) are non-compliant. Terminating these suppliers to meet the new policy's strict standards would immediately di…