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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions:

1. The unethical practice of using information that is not publicly available to trade on the stock market is commonly known as what?

A) greasing the wheels
B) bribery
C) insider trading
D) kickback

2. In an effort to enhance sustainability and ethical business practices, four companies have embedded Environmental, Social, and Governance (ESG) performance measures into their supplier agreements. Each organization has identified specific ESG challenges and established contractual requirements that suppliers must meet to align with corporate sustainability objectives.
Below is an overview of the ESG priorities for each company and the corresponding contractual terms:
Company 1:
This company has pledged to cut its carbon footprint by 40% by 2030. To achieve this target, it mandates that its suppliers actively contribute to emission reduction efforts. Suppliers are required to meet defined, measurable benchmarks related to carbon emissions and submit periodic reports detailing their progress on sustainability initiatives.
Company 2:
With a strong emphasis on fostering fairness and inclusivity, this company requires suppliers to align their payment structures and financial strategies with its commitment to equity. Suppliers must implement fair compensation policies, ensure timely salary disbursements via banking channels, and adopt ethical pricing structures that support inclusive hiring practices, particularly for underrepresented groups.
Company 3
Operating in industries prone to unethical practices, this company enforces stringent anti-corruption policies and financial transparency requirements for its suppliers. Suppliers must uphold rigorous governance standards, establish transparent reporting mechanisms, and comply with all anti-corruption regulations to ensure ethical business operations.
Company 4
This company is committed to making a meaningful impact on the communities in which its suppliers operate. As part of its contractual obligations, suppliers must actively participate in local initiatives that drive social and economic development. This includes contributing to community projects, generating employment opportunities, and supporting social welfare programs.
The four companies must establish contractual terms aligned with their respective ESG considerations, including a Community Benefit Clause, Key Performance Indicators (KPIs), Commercial Clause, and Governance Clause.
Match Column A with Column B from the following table:

A) Equality, Diversity, and Inclusion (EDI): Commercial Clause
B) Carbon Emissions: KPI as Performance Measure

3. The Global Compact Principles of the UN are legally binding for the member states who have signed up. Is this TRUE?

A) No- it is voluntary to join and not legally binding
B) Yes - it is voluntary to join, but it is legally binding once signed up
C) No- it is not legally binding and there is no requirement to publish any progress reports
D) Yes- reports must be filed regularly on process

4. A multinational engineering firm operates across multiple countries and has publicly committed to diversity and inclusion. However, an independent audit uncovers systemic issues:
1. Women with equal qualifications as men are consistently paid less for similar roles across all branches.
2. In the firm's regional office in Country X, minority ethnic applicants are frequently rejected for managerial roles without valid justification.
3. Employees with disabilities in Country Y are disproportionately placed in lower-growth roles, despite having skills for higher positions.
When questioned, leadership attributes these disparities to "cultural differences" and "regional norms." Which key labor rights issue does this scenario illustrate, and what actions should the company prioritize?

A) Elimination of discrimination in respect of employment and occupation; the company should implement a comprehensive diversity policy and actively monitor pay equity and equal opportunities
B) Freedom of association and collective bargaining; the company should allow workers to unionize and address these disparities through collective agreements
C) Elimination of forced labor; the company should focus on ensuring no workers are coerced into taking undesirable roles
D) Abolition of child labor; the company should ensure that all employees meet the legal working age

5. The World Fair Trade Organization (WFTO) aims to help large global businesses expand into new markets, offering better products and fairer prices for consumers. Is this statement accurate?

A) Yes, the WFTO provides financial aid to international companies
B) Yes, the WFTO establishes global rules to safeguard consumers
C) No, the WFTO primarily focuses on diminishing the influence of multinational corporations
D) No, the WFTO focuses on supporting smaller and disadvantaged producers

Solutions: