Free CIPS L5M5 Practice Exam with Questions & Answers | Set: 3

CSR policies allow businesses to integrate ethical, social, and environmental concerns into their operations. The L5M5 study guide (p.28) highlights several benefits: an improved reputation (A), enhanced competitiveness (B) by differentiating the company, and a positive impact on wider society (D). However, CSR policies do not provide protection from all legal issues (C)—illegal activities can still occur despite having a policy. CSR (sometimes referred to as ESG in modern usage) builds stakeholder trust, supports compliance with global sustainability frameworks, and enhances long-term resilience. Procurement teams are particularly important in embedding CSR into supply chains by ensuring supplier compliance and accountability.

???? Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.28

Fair Trade organisations protect producers economically by ensuring a minimum price for raw materials, regardless of market fluctuations. The L5M5 study guide (old p.224, new p.303) explains that this stabilises producer incomes against volatile commodity prices, tariffs, or currency risks. While Fair Trade also involves better working conditions and community investment, the primary economic safeguard is the guaranteed minimum price. Procurement professionals should recognise how Fair Trade contributes to supply chain stability and resilience.

???? Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.303

The L5M5 study guide (p.185) explains the distinction between regulatory documents. Guidelines are advisory documents providing best practice but are not legally binding. Regulations and statutes (A and C) are legally binding, and directives (B) are binding once incorporated into national legislation. Procurement professionals must be able to differentiate between binding legislation and advisory guidelines to ensure compliance. While guidelines help shape ethical practices, failure to follow them usually does not carry legal penalties.

???? Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.185

The International Labour Organisation (ILO) is a specialised UN agency founded in 1919 to promote labour rights and improve social protection. The L5M5 study guide (p.87) confirms that the ILO’s mission includes eliminating child labour, eradicating forced labour, and promoting fair wages and safe workplaces. It does not set trade rules (that is the WTO), nor was it created to drive globalisation. For procurement professionals, understanding the ILO is critical when assessing supplier practices against international labour standards, especially in global supply chains.

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

The L5M5 study guide (p.258) explains that blue washing refers to organisations associating with the UN Global Compact to appear legitimate while failing to implement its principles. The term comes from the blue colour of the UN flag. In contrast, greenwashing (A) is when companies exaggerate their environmental credentials. Blue washing is a reputational risk because it undermines genuine CSR initiatives and public trust. Procurement professionals must ensure that CSR commitments are backed by verifiable actions rather than symbolic gestures.

???? Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.258

The Equalities Act 2010 provides legal protection against discrimination in the UK. The L5M5 study guide (p.35) lists the protected characteristics, which include disability, pregnancy and maternity, age, race, sex, sexual orientation, gender reassignment, marriage/civil partnership, and religion/belief. Weight is not included as a protected characteristic. For procurement, understanding equality legislation is vital to ensuring suppliers uphold fair treatment of employees and do not discriminate unlawfully. Organisations must embed these protections into contracts and supplier codes of conduct.

???? Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.35