L4M4 Exam Dumps | Foresttors Plc is negotiating a new contract for the procurement of timber, a crucial component of its

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CIPS.L4M4.v2025-11-05.q105
Question 95

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Question 95/105

Foresttors Plc is negotiating a new contract for the procurement of timber, a crucial component of its production operations. The company has incorporated environmental, social, and governance (ESG) reporting requirements into the contractual terms. Is this a valid approach?

A. No, suppliers cannot be legally responsible for ESG compliance; this should be the buying organization

B. Yes, this helps to demonstrate the importance of compliance to ESG

C. No, ESG is not within the scope of a contractual document and should always be treated informally

D. Yes, providing the contract does not require a supplier to do anything differently for ESG than they have done previously

Correct Answer: B

Incorporating ESG requirements into contractual terms is a valid and increasingly common approach. It ensures that suppliers are contractually obligated to adhere to specific environmental, social, and governance standards, aligning with the buyer's commitment to responsible sourcing. This practice not only promotes ethical behavior but also mitigates risks associated with non-compliance, such as reputational damage or legal penalties.
Exact Extract from Study Guide:
"This unit focuses on responsible procurement practices, ensuring that sourcing decisions align with legal, environmental, and social governance (ESG) principles."

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