Final answer:
The statement is true; companies' policies and guidelines do shape their risk tolerance, including how they manage environmental factors. Environmental costs often account for a small portion of total expenses, with other factors being more decisive in business decisions.
Step-by-step explanation:
The statement that enterprise environmental factors are based on policies and guidelines that define an organization's risk tolerance is True. Enterprise environmental factors can be thought of as the conditions that influence a company's operations, which include internal and external factors such as market conditions, organizational culture, and the regulatory environment. One aspect of this environment is indeed the company's risk tolerance as set by its policies and guidelines, particularly in terms of how it approaches environmental risks and complies with environmental regulations. When businesses decide on the location or expansion of their facilities, a wide range of considerations are evaluated. It has been observed that the cost related to environmental regulations typically represents only 1 to 2% of an industrial plant's expenses. Instead, factors such as labor and financial capital costs, proximity to suppliers and customers, quality of infrastructure, tax levels, and local government effectiveness are prioritized, effectively diminishing the importance of seeking weaker environmental rules to reduce costs.