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

Comprehensive and Detailed Explanation From Exact Extract of Documents:

The L5M5 study guide (p.182) states that sustainability reporting and the adoption of ESG

(Environmental, Social, Governance) principles can stimulate organisational change and innovation.

By measuring and reporting on sustainability, companies often seek new technologies, processes,

and supply models to improve performance and meet ESG commitments. Reporting is not

mandatory in all cases, so option B is incorrect. While sustainability may improve reputation and

sometimes costs, these are not the key focus of this question. CIPS guidance stresses that

sustainability reporting can drive innovation—procurement can encourage suppliers to develop new

sustainable practices, products, and approaches.

📖Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.182

Comprehensive and Detailed Explanation From Exact Extract of Documents:

The L5M5 study guide (p.71) explains that the legitimate motive for Low-Cost Country Sourcing

(LCCS) is reducing operational expenses by accessing cheaper materials, labour, or manufacturing.

However, this must be conducted ethically, balancing cost savings with environmental, social, and

legal responsibilities. Options A and B reflect unethical practices, while C is irrelevant. Procurement

professionals must carefully evaluate suppliers in low-cost countries to ensure compliance with

ethical standards such as labour rights, environmental protection, and anti-bribery legislation. LCCS

can create value but must not compromise sustainability or governance.

📖Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.71

Comprehensive and Detailed Explanation From Exact Extract of Documents:

In the Kraljic Matrix, leverage items are high value but have many suppliers and low switching costs.

The L5M5 study guide (old p.108, new p.154) explains that buyers have strong negotiation power in

leverage situations and can achieve cost savings without high risk. Bottleneck items (B) are low-value

but high-risk due to limited suppliers, routine items (C) are low-value and low-risk, and strategic

items (D) are high-value and high-risk. Procurement professionals must use leverage strategically to

maximise value.

📖Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.154

Comprehensive and Detailed Explanation From Exact Extract of Documents:

The World Fair Trade Organisation (WFTO) has a set of 10 principles designed to ensure fair and

sustainable trade. These include providing opportunities for disadvantaged producers, ensuring the

payment of a local living wage, promoting gender equity, and rejecting child labour and forced

labour. The L5M5 study guide (p.295) confirms that the WFTO focuses on disadvantaged producers in

developing countries, differentiating it from organisations like the ILO, which sets broader labour

standards, and the OECD/EU, which focus on economic or political cooperation. Procurement

professionals may encounter WFTO-certified suppliers, especially in commodities like coffee, cocoa,

and handicrafts.

📖Reference: Managing Ethical Procurement and Supply (L5M5) Study Guide, p.295