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CIPS Managing Ethical Procurement and Supply (L5M5) Sample Questions (Q68-Q73):
NEW QUESTION # 68
A company seeks a fair-trade certification that covers its entire business operations instead of just individual products. Which organization offers certification for the entire organization rather than a single product?
- A. Fair Trade Federation
- B. Fairtrade International
- C. Fair for Life
- D. Fair Trade USA
Answer: A
Explanation:
Choice D- Fair Trade Federation is the correct answer! It is a membership-based organization that evaluates and certifies entire businesses that are committed to fair trade principles across all their operations, not just specific products.
Choice A - Fair Trade USA - Certifies individual products, not entire businesses. It allows companies to label specific items as "Fair Trade Certified" rather than certifying the company as a whole.
Choice B - Fair for Life - While it offers certification for supply chains and business practices, it primarily focuses on product certification rather than certifying an entire organization.
Choice C - Fairtrade International - Like Fair Trade USA, it certifies specific products, particularly commodities like coffee, cocoa, and bananas, rather than the entire business.
Reference:
LO-3.3; Page 300-301; Fairtrade international (FI), global fair trade organizations and their implications for procurement and supply
NEW QUESTION # 69
Global sourcing often increases carbon emissions due to the long distances goods must travel. Which of the following strategies can help reduce this environmental impact?
- A. Consolidating shipments to reduce the number of trips made
- B. Sourcing from multiple distant suppliers to ensure competitive pricing
- C. Increasing reliance on air freight for faster delivery
- D. Focusing exclusively on sourcing from local markets regardless of cost
Answer: A
Explanation:
Choice B- Consolidating shipments means combining multiple orders into fewer deliveries, which reduces the total number of trips required. This approach leads to lower carbon emissions per unit of goods transported and enhances efficiency in logistics. Thus is the correct answer.
Incorrect answer:
Choice A- Using air freight can actually increase carbon emissions significantly compared to other transportation methods like shipping or rail. While it may expedite delivery, it is one of the most environmentally harmful ways to transport goods over long distances.
Choice C- While this strategy may help in achieving lower costs, it can increase carbon emissions due to the greater number of shipments required. Sourcing from many distant suppliers often leads to less efficient logistics and higher environmental impact.
Choice D- Although sourcing locally can significantly reduce transportation-related emissions, focusing solely on local markets may not always be practical or cost-effective. It can limit access to certain products, materials, or pricing advantages that global sourcing might provide. A balanced approach considering both environmental impact and cost is often necessary.
Reference:
LO-1.2; Page 79; ESG considerations in global sourcing
NEW QUESTION # 70
Rahul, a procurement officer at a textile manufacturing company, aims to engage employees in integrating ESG (environmental, social, and governance) standards into daily operations. Is this an effective strategy?
- A. No, for implementing ESG standards there is no need to raise awareness
- B. Yes, because workers have the right to association and CBA
- C. No, because in raising ESG awareness workers have nothing to do
- D. Yes. Because, Employees are the best promoters and they feel valued if they involved
Answer: D
Explanation:
Choice D- Involving employees in raising sustainability awareness is a good strategy because by involving them, they feel valued and empowered, leading to increased engagement, ownership, and better promotion of sustainability practices. This is the correct answer.
Incorrect answer:
Choice A - This option is incorrect because raising awareness is a crucial step in implementing ESG initiatives. Without awareness, employees may lack the knowledge and motivation to adopt ESG practices, which can hinder the success of such efforts.
Choice B - This option is incorrect because the right to association and collective bargaining (CBA) refers to labor rights, not to ESG awareness. While these rights are important in the workplace, they do not justify involving workers in sustainability initiatives specifically.
Choice C - This option is incorrect because workers/employees are integral to the implementation of ESG practices. They play a key role in daily operations and can influence the organization's sustainability efforts. Claiming they have "nothing to do" disregards their potential contributions and undermines their importance in achieving ESG goals.
Reference:
LO-2.4; Page 224-225; Worker representation, processes and audit trails
NEW QUESTION # 71
As a procurement manager, you are evaluating the ethical sourcing practices of a company dedicated to improving labor standards across its supply chain. Your task is to match each labor code or standard with the most appropriate supplier relationship model that aligns with its principles.
Company 1: A multinational food corporation collaborates closely with a cocoa supplier in West Africa to establish a transparent supply chain. The company actively supports farmers in adopting sustainable agricultural practices, ensures fair wages, and is deeply committed to eradicating child labor. Their partnership is based on long-term engagement, working together to implement economic empowerment initiatives that benefit both the suppliers and the broader community.
Company 2: A global corporation sources raw materials from multiple international suppliers, ensuring compliance with ILO labor standards through audit reports and annual inspections. The company takes a compliance-driven approach, holding suppliers contractually accountable for adhering to regulations on fair wages, working conditions, and labor rights.
Company 3: A leading apparel brand outsources garment production to factories across several countries. The company has established a voluntary sustainability framework, encouraging suppliers to comply with environmental, human rights, labor, and anti-corruption standards. While participation is not legally binding, suppliers are expected to demonstrate a commitment to ethical and responsible business practices.
Company 4: A cost-driven enterprise prioritizes low-cost procurement, selecting suppliers based on price competitiveness. The company imposes strict penalties on suppliers that fail to meet contractual obligations regarding working hours, wages, and labor conditions, but does not engage with them beyond performance monitoring and enforcement. There is no collaborative effort to improve ethical sourcing or labor standards.
Now, match each company's approach with the most suitable supplier relationship spectrum, identifying how each aligns with global labor codes and ethical sourcing frameworks.
- A. ILO MNE Declaration: Transactional
- B. ETI (Ethical Trading Initiative): Collaborative
Answer: A,B
Explanation:
Company 1: Labor Code/Standard: ETI (Ethical Trading Initiative): ETI focuses on improving worker conditions, eradicating child labor, and promoting fair wages through collaboration between companies and suppliers. Supplier Relationship Spectrum: Collaborative: The company works closely with suppliers to implement sustainable farming practices and find long-term solutions for economic empowerment, which defines a collaborative relationship. Company 2: Labor Code/Standard: ILO MNE Declaration: The ILO MNE Declaration sets global labor standards and ensures compliance through audits and inspections, aligning with the practices described. Supplier Relationship Spectrum: Transactional: The company's relationship focuses on holding suppliers accountable through contracts and inspections, indicating a transactional relationship with minimal collaboration. Company 3: Labor Code/Standard: UN Global Compact: The description refers to a framework covering environmental, labor, human rights, and anti-corruption standards, which aligns with the voluntary principles of the UN Global Compact. Supplier Relationship Spectrum: Outsourced: The company outsources production to suppliers while ensuring compliance with standards, characteristic of an outsourced relationship. Company 4: Labor Code/Standard:SA8000: SA8000 focuses on workplace standards like wages and working hours, which the company enforces through penalties and monitoring. Supplier Relationship Spectrum: Adversarial: The relationship prioritizes cost and relies on strict enforcement rather than engagement or collaboration, making it adversarial. Reference: Chapter 2 & 3
NEW QUESTION # 72
Abed, the CEO of a manufacturing firm, plans to introduce an ESG policy. During a board meeting, concerns were raised about potential employee resistance to the initiative. What could be the most likely cause of this resistance?
- A. ESG policies require change which the employees are afraid of
- B. ESG policies require extra resources in both time and money
- C. Negative publicity
- D. A good ESG strategy promotes innovation
Answer: A
Explanation:
Choice D- ESG policies require change and many employees are worried by change. Thus D is the correct answer!
Incorrect answer:
Choice A- ESG agendas increases business reputation and does not negatively publicize.
Choice B- Requiring extra resources is a matter of the management and does not concern the employees.
Choice C- Promoting innovation is a positive effect of ESG policies and leads to more engaged employees.
Reference:
LO-1.1; Page 7; Analyze the application of ethical and ESG (Environmental, Social and Governance) factors in supple chains
NEW QUESTION # 73
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