CIPS Managing Ethical Procurement and Supply L5M5 Exam Practice Test

Answer : C

Comprehensive and Detailed Explanation From Exact Extract of Documents:

The L5M5 study guide (p.181) explains that sustainability-related measures, such as ESG, are only mandatory in some countries, not universally. For instance, the UK has legislation banning single-use plastic straws, while other countries may not. International organisations like the UN and ILO promote sustainability, but they cannot impose legislation globally---any treaty or framework must be ratified into national law. This means compliance is fragmented and varies across jurisdictions. Procurement professionals must therefore remain vigilant, as sourcing internationally exposes them to differing sustainability obligations and standards.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.181

Answer : B

Comprehensive and Detailed Explanation From Exact Extract of Documents:

The World Trade Organisation (WTO) is responsible for facilitating international trade agreements and resolving disputes between member states. According to the L5M5 study guide (p.87), the WTO provides a dispute settlement mechanism where countries can challenge trade barriers, tariffs, or unfair practices. The UN (A) focuses on peace, security, and development, while the ILO (C) addresses labour standards. Governments (D) do not resolve disputes independently when they are WTO members; instead, they rely on the WTO framework. Procurement professionals must understand the WTO's role, as its rulings influence trade laws, tariffs, and sourcing strategies.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.87

Answer : B

Comprehensive and Detailed Explanation From Exact Extract of Documents:

Porter's Creating Shared Value (CSV) concept integrates Corporate Social Responsibility (CSR) with philanthropy (B), meaning that companies can generate economic value while simultaneously creating social value for communities. The L5M5 study guide stresses that businesses can strengthen competitiveness while advancing social and economic conditions where they operate. Unlike traditional philanthropy, CSV embeds social impact into core business strategy rather than being a peripheral activity. Procurement professionals can apply this by selecting suppliers who deliver both economic efficiency and community benefits.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, section on CSR and shared value

Answer : D

Comprehensive and Detailed Explanation From Exact Extract of Documents:

The correct answer is Adversarial. The relationship spectrum described in the L5M5 study guide (p.151) outlines different approaches to supplier relationships: transactional, adversarial, tactical, and partnership. An adversarial relationship exists where both parties compete rather than collaborate, often trying to maximise their own benefit at the expense of the other. This type of relationship is common in short-term, price-driven procurement arrangements but is not conducive to long-term collaboration or ethical supply chain practices. Partnership relationships (A) involve cooperation and shared goals, transactional (B) are short-term and arms-length but neutral, and closer tactical (C) involve selective collaboration. Procurement professionals are encouraged to move away from adversarial relationships to more cooperative models where possible.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.151

Answer : D

Comprehensive and Detailed Explanation From Exact Extract of Documents:

SA8000 is a globally recognised certification standard for Social Accountability. The L5M5 study guide (p.264) confirms that it measures compliance with ethical labour practices such as child labour elimination, safe working conditions, fair wages, and working hours. It does not cover quality (A), environmental management (B), or risk management (C). For procurement professionals, SA8000 provides assurance that suppliers operate ethically, helping organisations meet CSR/ESG commitments across supply chains.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.264

Answer : C

Comprehensive and Detailed Explanation From Exact Extract of Documents:

The STEEPLED analysis tool examines external macro-environmental factors: Social, Technological, Economic, Environmental, Political, Legal, Ethical, and Demographic. The L5M5 study guide (p.55) confirms that ''D'' stands for Demographic, reflecting population trends, age structures, and workforce availability. This addition evolved from the earlier PESTLE model, later extended to STEEPLE and STEEPLED. Procurement professionals use this tool to assess external risks and opportunities that may affect supply markets and ethical sourcing.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.55

Answer : C

Comprehensive and Detailed Explanation From Exact Extract of Documents:

Insider trading occurs when individuals use confidential or non-public information to gain an unfair advantage in stock market trading. The L5M5 study guide (p.3) identifies insider trading as an example of unethical business behaviour. It is illegal in most jurisdictions because it undermines market fairness and investor confidence. Bribery (A) and kickbacks (B) involve corrupt practices in procurement, while 'greasing the wheels' (D) refers to facilitation payments. Procurement professionals must avoid insider trading directly and indirectly (e.g., suppliers disclosing confidential financial information) to maintain ethical compliance and governance.

Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.3