Ethics, Sustainability and the Future of Global Trade

Introduction

International trade has traditionally been assessed through exports, imports, tariffs, foreign exchange and competitiveness. Contemporary trade management requires a broader question: does cross-border commerce create economic value without transferring unacceptable social, environmental and governance costs to workers, communities, consumers and future generations?

Global supply chains connect producers, logistics providers, financiers, governments and consumers across jurisdictions with different laws, capacities and ethical expectations. This creates opportunities for employment, innovation and development, but also risks involving forced labour, corruption, unsafe working conditions, environmental degradation, tax abuse, data misuse and excessive carbon emissions.

Sustainability is therefore not a public-relations activity added after commercial decisions have been made. It increasingly affects market access, procurement, finance, insurance, reputation, regulatory compliance and long-term resilience. Trade professionals must be able to evaluate responsible-business systems, human-rights due diligence, environmental, social and governance (ESG) information, circular-economy models and carbon-border measures. They must also interpret major structural trends, including deglobalization, friend-shoring, geopolitical fragmentation and climate-related disruption.

Learning Objectives

By the end of this chapter, learners should be able to:

1. Explain the ethical responsibilities of firms engaged in international trade.
2. Distinguish compliance, corporate responsibility, sustainability and ESG.
3. Apply a risk-based human-rights and environmental due-diligence process.
4. Evaluate anti-bribery controls and responsible procurement practices.
5. Explain circular-economy principles and their implications for trade.
6. Interpret carbon-border principles and basic emissions calculations.
7. Assess deglobalization, friend-shoring, geopolitical fragmentation and climate risk.
8. Recommend future-oriented and responsible trade strategies.

1. Ethics and Responsible Business in International Trade

Business ethics concerns principles used to judge whether decisions and conduct are right, fair and responsible. Law establishes minimum enforceable standards; ethics may require action beyond legal compliance. A practice can be legal in a supplier’s country yet inconsistent with internationally recognised expectations concerning dignity, safety, corruption or environmental protection.

Responsible business means that an enterprise accepts accountability for the effects of its decisions and relationships. It includes:

• respecting human rights;
• preventing bribery, fraud and conflicts of interest;
• protecting workers and communities;
• reducing environmental harm;
• providing truthful product and sustainability information;
• paying suppliers fairly and on time where commercially feasible; and
• offering remedy when the enterprise causes or contributes to harm.

Ethical theories relevant to trade decisions

Consequentialism evaluates conduct by its outcomes. A sourcing decision that lowers prices but causes severe pollution may be ethically unacceptable because the total harm exceeds the commercial benefit.

Duty-based ethics emphasises obligations and rights. Forced labour is wrong even if eliminating it increases costs, because people must not be treated merely as instruments of profit.

Justice and fairness focus on the distribution of benefits and burdens. A supply chain is questionable when consumers and shareholders receive benefits while workers bear unsafe conditions and communities bear pollution.

Stakeholder theory holds that managers should consider parties affected by the firm, not only owners. Stakeholders include employees, suppliers, customers, investors, regulators, local communities and future generations.

These theories do not produce automatic answers. They provide lenses for identifying affected parties, comparing impacts and explaining decisions transparently.

Compliance, responsibility and sustainability

Compliance asks, “Are we obeying applicable rules?” Corporate responsibility asks, “What impacts do our decisions have, and what should we do about them?” Sustainability asks whether value creation can continue without undermining social and ecological systems. ESG is a reporting and management framework that groups material issues into environmental, social and governance categories.

ESG should not be confused with a universal score or a guarantee that a company is ethical. Ratings differ because agencies use different definitions, weights and data. Good governance therefore requires understanding the underlying indicators, boundaries, assumptions and evidence.

2. Anti-Bribery and Integrity Controls

Bribery is the offering, promising, giving, requesting or accepting of an undue advantage to influence a person’s conduct. It may involve public officials, private-sector employees, intermediaries or customs agents. Facilitation payments, opaque commissions, gifts, hospitality, charitable donations and political contributions can all create corruption risks.

International trade is particularly exposed because it involves customs clearance, licences, inspections, government procurement, agents, distributors and politically sensitive markets. Relevant legal regimes differ, but firms may face liability under home-country laws, host-country laws and the laws of countries connected to the transaction.

An effective anti-bribery programme normally includes:

1. Tone from the top: senior management communicates a clear prohibition and allocates resources.
2. Risk assessment: the firm identifies high-risk countries, sectors, transactions, officials and intermediaries.
3. Third-party due diligence: agents and distributors are screened for ownership, reputation, qualifications and payment arrangements.
4. Controls: approval thresholds, segregation of duties, accurate books, payment verification and contract clauses are established.
5. Training and communication: relevant staff and partners understand prohibited conduct and reporting channels.
6. Speak-up mechanisms: confidential reporting and non-retaliation protections are provided.
7. Investigation and remediation: allegations are assessed promptly, evidence is preserved and controls are improved.

A commission substantially above market norms, payment to an unrelated account, refusal to disclose beneficial ownership or insistence on cash are warning signs. A compliance certificate alone is not proof of integrity; controls must operate in practice.

3. Human-Rights and Environmental Due Diligence

Due diligence is an ongoing, risk-based process for identifying, preventing, mitigating, tracking and communicating how an enterprise addresses actual and potential adverse impacts. It is not the same as obtaining a supplier questionnaire or conducting a single audit.

A practical six-stage process is:

Stage 1: Embed responsible conduct

Adopt a policy approved by leadership, assign responsibilities and integrate expectations into purchasing, sales, logistics, finance and product design.

Stage 2: Identify and assess risks

Map suppliers, subcontractors, raw materials, transport routes and affected communities. Assess severity and likelihood. Severity should consider scale, scope and how difficult it is to restore the affected right or environment.

Stage 3: Prevent and mitigate

Use supplier-development programmes, safer production methods, realistic lead times, worker training, contract requirements and purchasing practices that do not encourage excessive overtime or unsafe shortcuts.

Stage 4: Track effectiveness

Use multiple evidence sources: worker interviews, grievance data, incident records, independent assessments, satellite or environmental data, and direct engagement with communities. Audits may miss informal workers, falsified records or retaliation; they should not be the sole method.

Stage 5: Communicate

Report material risks, actions, limitations and outcomes accurately. Claims should be specific, evidenced and proportionate. “Zero risk” and “100% ethical” claims are usually misleading because supply-chain knowledge is imperfect.

Stage 6: Provide or cooperate in remedy

Where the firm caused or contributed to harm, it should help provide remedy. Where it is directly linked through a business relationship, it should use leverage to prevent recurrence and support remediation. Remedy may include repayment of withheld wages, medical assistance, reinstatement, compensation, restoration or formal apology, depending on the harm.

Prioritisation matrix

Trade managers often cannot address every risk simultaneously. A useful prioritisation approach ranks issues by severity and likelihood, while giving priority to severe human-rights impacts even when probability is uncertain. A low-probability risk of fatal injury may deserve earlier attention than a frequent but minor administrative nonconformity.

Due diligence also requires responsible purchasing. Last-minute order changes, unrealistic prices, delayed payments and sudden termination can transfer risk to vulnerable workers. Buyer behaviour is therefore part of the risk system.

4. Sustainable Trade and ESG Management

Sustainable trade seeks to maintain economic exchange while protecting environmental systems and social well-being. It involves both operational efficiency and questions of fairness. For example, reducing packaging may lower emissions, but replacing durable packaging with fragile material could increase product losses and total impacts.

Materiality

A matter is financially material when it could influence investors’ or lenders’ decisions. It is impact material when the enterprise’s activities significantly affect people or the environment. A matter can be impact material before it becomes financially material. Advanced sustainability management considers both perspectives and documents the assessment process.

Measuring emissions

Greenhouse-gas accounting commonly distinguishes:

• Scope 1: direct emissions from sources owned or controlled by the organisation;
• Scope 2: indirect emissions from purchased electricity, steam, heating or cooling; and
• Scope 3: other indirect value-chain emissions, including purchased goods, transport, business travel, product use and end-of-life treatment.

A basic activity-based estimate is:

where E is estimated emissions, A is the activity level, and EF is the relevant emissions factor. If activity is measured in litres of fuel and the factor in kilograms of CO₂-equivalent per litre, emissions are measured in kilograms of CO₂-equivalent. The method assumes the emissions factor is appropriate to the fuel, geography, technology and accounting boundary. It is an estimate, not a direct measurement.

For several activities:

Here, i indexes activities. The result is meaningful only when boundaries are consistent and double counting is controlled.

Worked example. A shipment uses 800 litres of fuel. The selected factor is 2.68 kg CO₂e per litre. Estimated emissions are:

If the shipment carries 10 tonnes of product, emissions intensity is:

where Q is the quantity transported. The comparison is valid only if shipment distance, load factor, route, fuel data and product boundaries are comparable.

ESG governance risks

ESG programmes can fail through greenwashing, selective disclosure, weak data controls, incompatible reporting boundaries or excessive reliance on ratings. Managers should establish data owners, calculation methods, review procedures, evidence retention and board oversight. Sustainability metrics should influence capital expenditure, supplier selection, product design and incentives rather than remain isolated in a report.

5. Circular Economy and Trade

The linear model—extract, produce, use and discard—creates dependence on finite resources and exposes firms to price volatility, waste regulation and supply disruption. A circular economy aims to keep products, components and materials at their highest practical value for as long as possible while reducing waste and regenerative pressure on nature.

Important strategies include:

• designing for durability, repair, modularity and disassembly;
• reuse, refurbishment and remanufacturing;
• product-as-a-service models;
• recycling and recovery of materials;
• industrial symbiosis, where one process uses another’s by-products; and
• reverse logistics and take-back systems.

Circular trade changes the direction and character of flows. A company may import components, export refurbished products, return used goods for repair, and move recovered materials across borders. Customs classification, product standards, waste-shipment rules, intellectual property, warranty responsibilities and data about product condition become important.

Circularity does not automatically equal sustainability. Recycling can consume substantial energy; shipping used goods can displace local markets; and a leasing model can encourage overconsumption. Evaluation should consider life-cycle impacts, product utility, labour conditions and rebound effects.

6. Carbon Borders and Climate-Related Trade Measures

A carbon-border measure seeks to reduce competitive distortions and carbon leakage by associating imported goods with a carbon cost comparable to that faced by domestic production. Carbon leakage occurs when production moves to jurisdictions with weaker climate constraints or when imports replace lower-emission domestic production.

Design questions include:

• Which products and emissions are covered?
• Are direct emissions only included, or also electricity and selected upstream emissions?
• How are embedded emissions measured and verified?
• How are foreign carbon prices recognised?
• How are developing-country concerns and administrative capacity addressed?
• What safeguards prevent discrimination or disguised protectionism?

A simplified embedded-emissions calculation is:

where C_embedded is embedded emissions, Q is the quantity of imported product, and CI is emissions per unit of product. If Q is in tonnes and CI is in tonnes CO₂e per tonne, the result is tonnes CO₂e.

A stylised payable amount can be represented as:

where P is the residual carbon payment, p_import is the applicable domestic or border carbon price per tonne CO₂e, and C_foreign is a verified carbon price already paid abroad. This is a conceptual model, not a universal legal formula. Actual obligations depend on the governing regulation, product scope, reporting rules, exemptions, verification and transitional arrangements.

Illustration. If an import contains 120 tonnes CO₂e, the applicable price is 70 monetary units per tonne and 2,000 monetary units of a verified foreign carbon price is recognised, then:

If the recognised foreign price were 9,000 monetary units, the residual would be zero under this simplified rule. The example assumes all emissions are eligible, data are verified and the price is legally recognised.

Carbon-border systems can encourage cleaner production and better emissions data, but they may impose disproportionate costs on smaller exporters and countries with limited measurement capacity. Fair implementation requires technical assistance, transparent methodologies and attention to development impacts.

7. Deglobalization, Friend-Shoring and Geopolitical Fragmentation

Deglobalization refers to a relative retreat from highly integrated global production and trade, although it does not necessarily mean the end of international commerce. Firms may shorten supply chains, duplicate production, hold more inventory or source from fewer politically trusted locations.

Friend-shoring relocates or concentrates supply-chain activity among countries considered politically reliable or strategically aligned. It may reduce exposure to sanctions, export controls and political coercion, but it can increase costs, exclude capable suppliers and create new concentration risks.

Near-shoring moves activity geographically closer to the final market. Reshoring returns activity to the home country. These strategies should be distinguished from genuine resilience: a nearby single supplier can be less resilient than a geographically diverse network.

Geopolitical fragmentation may arise from armed conflict, sanctions, rival technology standards, critical-mineral competition, maritime insecurity, industrial policy or restrictions on advanced technology. Its effects include:

• higher transaction and compliance costs;
• duplicated facilities and standards;
• slower technology diffusion;
• volatility in freight, energy and commodity prices;
• pressure to disclose supply-chain origin; and
• tension between efficiency, security and openness.

A responsible trade strategy should use scenario analysis rather than assume that political alignment eliminates risk. Managers should map tier-two and tier-three suppliers, identify critical inputs, test alternative routes, review sanctions exposure and develop exit or continuity plans. Resilience should be measured by the ability to absorb, adapt and recover—not simply by the number of domestic suppliers.

8. Climate Change and Future Trade Models

Climate change affects trade through physical and transition risks. Physical risks include floods, droughts, heat, storms, sea-level rise and water scarcity. Transition risks arise from new regulations, carbon prices, changing consumer demand, technological substitution and stranded assets.

Trade corridors may be interrupted by low river levels, damaged ports or extreme heat affecting labour productivity. Agricultural exports may face changing yields and sanitary risks. Insurance and finance may become more expensive for exposed infrastructure. Adaptation therefore belongs in supply-chain design, not only in environmental reporting.

Future trade is likely to combine several models:

1. Digitally enabled trade: electronic documentation, platforms, traceability and automated customs processes.
2. Low-carbon trade: renewable energy, efficient logistics, green fuels and verified product footprints.
3. Circular trade: repair, reuse, remanufacturing and reverse logistics across borders.
4. Resilient regional networks: regional production combined with selected global suppliers.
5. Inclusive trade: stronger participation by small firms, developing-country producers, women-owned enterprises and informal workers transitioning into protected employment.
6. Strategic trade: government-supported capacity in health, energy, food, semiconductors and critical minerals.

Technology and AI can support demand forecasting, route optimisation, anomaly detection, supplier screening and emissions estimation. However, automated systems may reproduce biased data, misclassify suppliers or create false confidence. Human review, explainability, cybersecurity, privacy protection and accountability remain essential. AI should assist due diligence, not replace engagement with workers and affected communities.

9. Integrated Managerial Framework

A trade manager can integrate the chapter’s ideas through the following decision sequence:

1. Define the transaction: product, countries, actors, route, value and legal regimes.
2. Map dependencies: suppliers, subcontractors, logistics, finance, data and critical materials.
3. Screen risks: corruption, sanctions, human rights, environmental harm, climate exposure and carbon regulation.
4. Assess severity and materiality: identify who may be harmed, how seriously and with what likelihood.
5. Select controls: contractual, operational, technical, financial and governance measures.
6. Engage stakeholders: suppliers, workers, regulators, communities, customers and experts.
7. Measure and verify: define indicators, boundaries, evidence and review frequency.
8. Remediate and learn: respond to incidents, compensate where appropriate and revise the system.
9. Report carefully: disclose progress and limitations without exaggeration.
10. Review scenarios: test disruption, regulatory change, climate events and technology failure.

This framework prevents sustainability from being treated as a narrow audit exercise. It connects ethics to commercial decisions, risk management and long-term strategy.

Applied Case: Meridian Apparel’s Responsible Sourcing Transition

Background

Meridian Apparel, an illustrative mid-sized clothing importer, sourced garments from four countries. Its commercial team selected suppliers mainly on price and delivery speed. A media investigation reported excessive overtime and recruitment-fee debt among workers in one supplier’s factory. At the same time, a major customer demanded product-level emissions information and evidence of modern-slavery controls.

Problem

Meridian had signed a supplier code but had no tier-two mapping, no worker grievance channel independent of factory management, inconsistent audit quality and no reliable emissions baseline. Immediately cancelling the supplier could leave workers without income and shift production to an unknown factory.

Analysis

The company identified three connected risks: labour exploitation, weak purchasing practices and loss of market access. It found that short lead times and order changes had contributed to excessive overtime. The risk was therefore not solely a supplier failure; Meridian had contributed through its purchasing model.

Approach and solution

Meridian adopted a risk-based programme. It mapped recruitment agencies and subcontractors, required repayment of unlawful recruitment fees, established worker-accessible grievance channels and engaged an independent organisation to monitor retaliation. It revised forecasting and lead times, prohibited unauthorised subcontracting and introduced payment and delivery-performance indicators that did not reward unsafe acceleration.

For climate management, it collected fuel, electricity and shipment data, calculated a baseline using activity data and emissions factors, and prioritised energy efficiency before purchasing credible residual instruments. Procurement staff were trained to evaluate total cost and risk rather than unit price alone. A cross-functional committee reviewed incidents quarterly.

Outcome

After twelve months, the factory had documented repayment plans, improved grievance access and reduced emergency overtime. Meridian achieved more reliable emissions data and retained the customer, although costs increased modestly. The company acknowledged that the programme could not guarantee zero harm and committed to continued worker engagement and independent verification.

Learning points

The case demonstrates that responsible trade requires leverage, not merely exit; buyer practices can create social risk; data quality is a governance issue; and sustainability investments may protect market access and resilience even when they raise short-term costs.

Challenges and Limitations

Responsible trade systems face several limitations. Supply-chain data may be incomplete, incomparable or commercially sensitive. Audits can be manipulated and may overlook migrant, temporary or informal workers. ESG ratings can conflict. Carbon accounting depends on boundaries and factors. Certification can reduce search costs but cannot replace investigation. Small suppliers may lack funds for compliance, while excessive requirements can exclude them from markets.

There are also political tensions. Environmental requirements may be viewed as protectionism; human-rights expectations may conflict with local law or institutional capacity; and strategic trade policy may reduce efficiency. Ethical management requires transparency about trade-offs rather than claims that every objective can be maximised simultaneously.

Best Practices for Trade Professionals

• Use risk-based, proportionate due diligence rather than checklists alone.
• Map beyond first-tier suppliers for high-risk goods and regions.
• Align purchasing targets with labour and environmental expectations.
• Verify sustainability data and document assumptions.
• Build remedy and grievance mechanisms before crises occur.
• Screen intermediaries and beneficial owners carefully.
• Integrate climate and geopolitical scenarios into business continuity planning.
• Prefer prevention and emissions reduction before relying on offsets.
• Avoid vague environmental claims and disclose uncertainty.
• Train commercial, logistics, finance and compliance teams together.
• Include smaller suppliers through support and capability-building.
• Treat workers and affected communities as sources of evidence and participants in solutions.

Chapter Summary

Ethical and sustainable trade extends international business beyond price, volume and legal compliance. Responsible firms identify and address their effects on people, the environment and governance systems. Anti-bribery programmes require leadership, risk assessment, third-party controls, accurate records, reporting channels and remediation. Human-rights and environmental due diligence is an ongoing cycle of embedding policies, identifying risks, preventing harm, tracking results, communicating and providing remedy.

ESG provides a structure for managing environmental, social and governance issues, but its value depends on materiality analysis, reliable data and effective oversight. Circular-economy strategies seek to preserve product and material value through durability, reuse, repair, remanufacturing and recovery. Carbon-border measures connect market access with embedded-emissions measurement and can reduce leakage, but they require fair, transparent implementation.

Deglobalization, friend-shoring and geopolitical fragmentation are reshaping supply-chain choices. Climate change creates both physical and transition risks. Future trade will likely be more digital, regional, low-carbon, circular and strategically managed, while responsible use of AI will require human oversight. The central managerial task is to balance efficiency, resilience, inclusion and environmental limits through evidence-based, accountable decisions.

Key Terms

Ethics: Principles used to evaluate right, fair and responsible conduct.

Responsible business: Conduct that accounts for a firm’s effects on people, society and the environment.

Stakeholder: A person or group affected by, or able to affect, an organisation.

ESG: Environmental, social and governance issues used in management and reporting.

Materiality: The significance of an issue for decisions or for impacts on people and the environment.

Due diligence: An ongoing process to identify, prevent, mitigate, track and communicate adverse impacts.

Remedy: Action taken to correct or compensate for harm.

Bribery: Offering or receiving an undue advantage to influence conduct.

Greenwashing: Misleading presentation of environmental performance or benefits.

Scope 1: Direct greenhouse-gas emissions from owned or controlled sources.

Scope 2: Indirect emissions from purchased energy.

Scope 3: Other indirect value-chain emissions.

Circular economy: An economic model that keeps products and materials in use and reduces waste.

Carbon leakage: Movement of emissions or production to jurisdictions with weaker climate constraints.

Carbon-border measure: A policy associating imported goods with a carbon cost related to embedded emissions.

Deglobalization: Relative retreat from highly integrated global production and trade.

Friend-shoring: Sourcing or production among politically aligned or trusted countries.

Geopolitical fragmentation: Division of markets, rules or networks due to political and strategic conflict.

Climate transition risk: Risk arising from changes toward a lower-carbon economy.

Supply-chain resilience: Capacity to absorb, adapt to and recover from disruption.

Review Questions

Short Answer Questions

1. Distinguish legal compliance from business ethics.
2. What are the three emissions scopes?
3. Define human-rights due diligence.
4. What is friend-shoring?
5. State two circular-economy strategies.

Long Answer Questions

1. Explain the stages of a risk-based human-rights and environmental due-diligence process.
2. Discuss the elements of an effective anti-bribery programme in international trade.
3. Explain how ESG information can influence trade strategy and market access.
4. Analyse the benefits and limitations of carbon-border measures.
5. Discuss how climate change and geopolitical fragmentation affect supply-chain design.

Analytical / Application Questions

1. A buyer discovers forced-labour indicators at a strategic supplier. Should it immediately terminate the relationship? Develop a risk-based response that addresses remedy, leverage and continuity.
2. An exporter has incomplete emissions data and faces a carbon-border reporting requirement. Design a practical data-governance and estimation plan, identifying assumptions and risks.
3. Compare global sourcing, regional sourcing and friend-shoring for a critical component. Recommend a portfolio strategy using cost, resilience, ethics, climate and geopolitical criteria.

Multiple Choice Questions with Answers

Question 1

Which statement best describes human-rights due diligence?

A. A one-time supplier certification exercise

B. An ongoing process of identifying, preventing, mitigating, tracking and communicating impacts

C. A method used only after a legal violation

D. A financial audit of a company’s annual accounts

Correct Answer: B. An ongoing process of identifying, preventing, mitigating, tracking and communicating impacts

Question 2

Which activity is normally classified as Scope 2 emissions?

A. Fuel burned in a company-owned truck

B. Emissions from a customer’s use of a product

C. Emissions associated with purchased electricity

D. Emissions from a supplier’s factory

Correct Answer: C. Emissions associated with purchased electricity

Question 3

A shipment uses 800 litres of fuel with an emissions factor of 2.68 kg CO₂e per litre. What are its estimated emissions?

A. 214.4 kg CO₂e

B. 2,144 kg CO₂e

C. 21,440 kg CO₂e

D. 2.68 kg CO₂e

Correct Answer: B. 2,144 kg CO₂e

Question 4

Which is a warning sign in third-party anti-bribery due diligence?

A. Transparent ownership information

B. A written scope of services

C. A request for payment to an unrelated account

D. Payment through a verified bank account under contract terms

Correct Answer: C. A request for payment to an unrelated account

Question 5

What is the primary purpose of a circular economy?

A. To maximise disposal speed

B. To keep products and materials at their highest practical value for longer

C. To eliminate all international trade

D. To replace all services with physical products

Correct Answer: B. To keep products and materials at their highest practical value for longer

Question 6

Carbon leakage occurs when:

A. A company reports emissions twice

B. Production or emissions shift to jurisdictions with weaker climate constraints

C. A shipment is delayed at customs

D. A product is repaired instead of discarded

Correct Answer: B. Production or emissions shift to jurisdictions with weaker climate constraints

Question 7

Which statement about friend-shoring is most accurate?

A. It always minimises total supply-chain cost

B. It eliminates all geopolitical risk

C. It concentrates sourcing among politically trusted countries but may create cost and concentration risks

D. It means returning all production to the home country

Correct Answer: C. It concentrates sourcing among politically trusted countries but may create cost and concentration risks

Question 8

If embedded emissions are 120 tonnes CO₂e and the applicable carbon price is 70 monetary units per tonne, what is the gross carbon amount before recognising a foreign carbon price?

A. 190 monetary units

B. 1,680 monetary units

C. 8,400 monetary units

D. 84,000 monetary units

Correct Answer: C. 8,400 monetary units

Question 9

Why are worker interviews useful in supply-chain due diligence?

A. They guarantee that all reported information is accurate

B. They can reveal conditions that formal records or audits may miss

C. They replace the need for any supplier engagement

D. They are used only to calculate product prices

Correct Answer: B. They can reveal conditions that formal records or audits may miss

Question 10

Which approach best reflects responsible use of AI in sustainability management?

A. Allowing an automated score to replace all human investigation

B. Using AI with data validation, human review, explainability and accountability

C. Using only historical data without checking bias

D. Keeping the model’s limitations undisclosed

Correct Answer: B. Using AI with data validation, human review, explainability and accountability