Sustainability, Climate, Ethics and Responsible Supply Chains

Introduction and Context

Supply chains are increasingly judged not only by cost, quality, speed and service, but also by their effects on climate, ecosystems, workers, communities and society. A supply chain may be operationally efficient yet strategically fragile if it depends on forced labour, water-stressed regions, carbon-intensive transport, opaque intermediaries or suppliers exposed to extreme weather. Sustainability has therefore moved from a corporate-social-responsibility concern to a core dimension of supply chain risk management.

Responsible supply chain management integrates environmental, social and governance (ESG) considerations into sourcing, design, logistics, production, inventory, supplier development, contracting and performance measurement. The objective is not simply to reduce negative impacts. It is to build supply networks that remain viable, legitimate and adaptable while creating value for customers, workers, investors, regulators and communities.

Climate and sustainability risks have both direct and indirect consequences. Flooding can stop a factory; heat can reduce labour productivity; drought can restrict semiconductor or food production; new carbon regulation can change landed cost; allegations of forced labour can trigger product seizures, litigation and loss of customer trust. These risks interact, making traditional risk registers insufficient unless they include time horizons, stakeholder impacts, systemic dependencies and potential irreversible harm.

Learning Objectives

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

1. Distinguish environmental, climate, social, human-rights, ethical and reputational supply chain risks.
2. Explain the role of ESG, materiality, due diligence and stakeholder accountability.
3. Apply frameworks for climate-risk assessment, responsible sourcing, traceability and circularity.
4. Evaluate supplier and network decisions using both commercial and sustainability criteria.
5. Design governance, metrics and escalation processes for responsible supply chains.
6. Critically assess the limitations of sustainability data, audits, certifications and technology.

1. Sustainability as a Supply Chain Risk Concept

Sustainability concerns the ability of present systems to meet current needs without undermining the environmental, social and economic conditions required by future generations. In supply chain management, this definition has three connected dimensions:

• Environmental sustainability: limiting greenhouse-gas emissions, pollution, biodiversity loss, waste, resource depletion and ecological damage.
• Social sustainability: protecting health, safety, dignity, fair treatment, livelihoods, inclusion and community welfare.
• Economic and governance sustainability: maintaining financially viable operations, lawful conduct, accountability, transparency and ethical decision-making.

These dimensions are interdependent. A low-cost supplier may achieve price competitiveness by transferring environmental or social costs to workers and communities. Conversely, a transition to renewable energy may reduce emissions but create new risks involving mineral extraction, land rights or worker displacement. Supply chain risk management must therefore examine trade-offs rather than assume that every sustainability intervention is automatically beneficial.

Important terminology

Climate risk is the possibility that climate-related physical changes or the transition to a low-carbon economy will cause financial, operational, legal or strategic harm. Physical risks include storms, floods, wildfires, sea-level rise, heat and water scarcity. Transition risks include carbon pricing, technology substitution, regulation, changing customer preferences and stranded assets.

Environmental risk includes pollution, hazardous substances, waste, deforestation, biodiversity loss, water stress and ecosystem degradation, whether or not directly caused by climate change.

Social risk concerns adverse effects on employees, contract workers, communities, consumers and other affected groups.

Human-rights risk concerns possible adverse impacts on rights recognised in international instruments and applicable law, including freedom from forced labour, child labour, discrimination, violence and unsafe work.

Reputational risk is the possibility that stakeholder perceptions of an organisation or its partners will reduce trust, demand, access to capital, employee attraction or licence to operate. Reputation is an outcome of underlying conduct, not a substitute for analysing that conduct.

Responsible sourcing means procuring materials and services through processes that identify, prevent, mitigate and remedy environmental, social and governance harms.

Due diligence is an ongoing, risk-based process for identifying actual and potential adverse impacts, integrating findings into decisions, taking action, tracking results and communicating how impacts are addressed.

2. Climate Risk in Supply Networks

2.1 Physical risk

Physical climate risk may be acute or chronic. Acute events include hurricanes, floods and wildfires. Chronic changes include rising average temperatures, sea-level rise, changing precipitation and long-term water scarcity. A single-site assessment is inadequate because a supplier may depend on vulnerable utilities, ports, roads, farms, warehouses or tier-two inputs.

A practical assessment asks:

1. Which facilities, transport corridors, utilities and suppliers are exposed?
2. How sensitive are products and processes to the hazard?
3. What adaptive capacity exists, such as alternative sites, insurance, inventory or flexible transport?
4. Which customers, products and contractual commitments would be affected?
5. Are risks concentrated in the same geography or infrastructure system?

Climate exposure should be examined across multiple time horizons. A facility that appears secure over the next year may face material water or heat risk over ten years. Scenario analysis can compare plausible futures rather than predict one precise outcome. Scenarios should include assumptions about temperature, regulation, technology, energy prices, customer behaviour and supplier adaptation.

2.2 Transition risk

Transition risk arises as governments, markets and societies move toward lower-emission and more resource-efficient systems. Examples include:

• carbon taxes, emissions trading and mandatory disclosure;
• restrictions on deforestation or hazardous chemicals;
• customer requirements for low-carbon materials;
• rapid adoption of electric vehicles or renewable power;
• declining demand for carbon-intensive products;
• increased costs for finance, insurance or imported goods.

The same supplier can face both physical and transition risks. For example, a coal-dependent factory may be affected by heat waves while also facing higher energy costs and future regulatory restrictions.

2.3 Measuring supply chain emissions

A basic greenhouse-gas inventory uses activity data multiplied by an appropriate emissions factor:

where E is estimated emissions, normally expressed in kilograms or tonnes of carbon-dioxide equivalent (CO₂e); A is an activity amount, such as litres of fuel, kilowatt-hours of electricity or tonne-kilometres transported; and EF is the emissions factor, expressed as CO₂e per unit of activity. The formula assumes that the activity boundary and emissions factor are consistent and that the factor represents the relevant geography, technology and reporting period.

For several activities:

The summation is appropriate when activities have different units and corresponding emissions factors. Results should not be added until each component has been converted into a common unit, such as tonnes CO₂e. Scope 1 emissions generally arise from sources owned or controlled by the organisation; Scope 2 emissions arise from purchased energy; and Scope 3 emissions occur elsewhere in the value chain, including purchased goods, transport, business travel, product use and end-of-life treatment. Organisational reporting must define boundaries carefully to avoid double counting or false precision.

Worked example. A shipment uses 2,000 litres of fuel. If the verified factor is 2.68 kg CO₂e per litre, estimated emissions are:

E = 2,000 × 2.68 = 5,360 kg CO₂e = 5.36 tonnes CO₂e

This estimate is valid only for the stated fuel, factor and combustion boundary. It does not automatically include upstream fuel production, refrigeration, empty return movements or warehouse electricity.

Carbon intensity can support comparison across changing volumes:

where I is emissions intensity, E is emissions, and Q is a relevant output such as units produced, revenue or tonne-kilometres. The denominator must be stable, meaningful and disclosed. A fall in intensity does not necessarily mean that absolute emissions have fallen if total volume grows substantially.

3. Environmental and Circular Supply Chain Risk

Environmental risk extends beyond carbon. Key areas include water, land, biodiversity, chemicals, air quality, waste and resource scarcity.

Water and biodiversity

Water risk should consider availability, quality, competing users, legal restrictions and watershed conditions. A plant may have adequate local water rights but still contribute to community scarcity. Biodiversity risk arises through habitat conversion, extraction, pollution, invasive species and infrastructure development. Agricultural, mining, forestry, construction, food and apparel supply chains commonly require location-specific analysis.

Circularity

A linear model extracts resources, makes products, uses them and discards them. A circular model seeks to reduce virgin material use, extend product life, enable repair and reuse, recover materials and eliminate waste by design. Circularity is not synonymous with recycling. Product durability, modularity, reverse logistics, remanufacturing and service-based business models may prevent waste more effectively than end-of-life recovery.

Circular supply chains create new risks: returned products may be contaminated, reverse flows may be unpredictable, recovered materials may have inconsistent quality, and recycling claims may be misleading. Governance must specify chain of custody, material quality, ownership and responsibility for residual waste.

Useful indicators include recycled content, product-life extension, recovery rate, repair rate, landfill diversion and virgin-material intensity. No single indicator captures circular performance; an organisation can report high recycling while designing products that are difficult to repair or reuse.

4. Social and Human-Rights Risk

Supply chains may expose people to excessive working hours, unsafe conditions, wage violations, discrimination, harassment, forced labour, child labour, recruitment debt, restriction of worker voice and loss of land or livelihood. Risks are often higher where labour is informal, migrant, subcontracted or geographically distant from the buying organisation.

A responsible approach distinguishes inherent risk from residual risk. Inherent risk exists before controls and reflects factors such as country context, commodity, labour model, purchasing pressure and process hazard. Residual risk remains after controls. A supplier may possess excellent documentation yet retain high residual risk if workers cannot safely report abuse or if commercial targets encourage concealment.

Human-rights due diligence should generally involve:

1. Policy commitment: define expectations, responsibilities and prohibited conduct.
2. Risk identification: map suppliers, products, locations, workers and affected communities.
3. Impact assessment: combine document review, worker engagement, site evidence and contextual research.
4. Integration: connect findings to sourcing, design, contracts, forecasting and supplier development.
5. Prevention and mitigation: change purchasing practices, improve conditions, train managers and invest in corrective action.
6. Remediation: provide or cooperate with remedy where the organisation caused or contributed to harm.
7. Tracking and communication: monitor outcomes and report credible information.

A social audit is one input, not proof of responsible performance. Announced audits can encourage temporary compliance; worker interviews may be constrained; subcontractors may be omitted; and audit closure may reward paperwork rather than actual improvement. Effective programmes use unannounced or semi-announced assessment where appropriate, confidential worker voice, grievance channels, purchasing-data analysis and independent verification.

5. ESG, Materiality and Governance

ESG is a classification used to organise information about environmental, social and governance matters. It is not a universal score and should not replace context-specific risk analysis.

Materiality asks which issues could significantly influence decisions or outcomes. Financial materiality focuses on effects on enterprise value, cash flows, access to finance or strategic position. Impact materiality focuses on the organisation’s actual or potential effects on people and the environment. A double-materiality perspective considers both directions.

A materiality assessment should include stakeholder engagement, value-chain mapping, severity and likelihood analysis, legal requirements, time horizons and management control. Severity of human-rights harm may depend on scale, scope and irremediability; a low-frequency event can still deserve priority if consequences are catastrophic or irreversible.

Governance mechanisms include:

• board oversight and executive accountability;
• a cross-functional sustainability and risk committee;
• clear ownership for procurement, operations, legal, compliance and sustainability;
• supplier standards incorporated into contracts;
• protected whistleblowing and grievance mechanisms;
• escalation thresholds and documented decisions;
• internal controls over ESG data and claims;
• independent assurance for important disclosures.

Incentives matter. If buyers are rewarded only for annual savings, they may select suppliers with hidden social and environmental costs. Balanced objectives should include total cost, resilience, emissions, worker outcomes, quality, delivery and remediation performance.

6. Responsible Sourcing and Traceability

Responsible sourcing begins with understanding what is purchased, from whom, where it is produced and which upstream inputs are involved. Mapping should progress beyond tier-one suppliers when risk warrants it. A practical segmentation considers spend, criticality, geography, commodity, labour intensity, environmental footprint, substitutability and evidence quality.

Traceability is the ability to follow a material, product or transaction through specified stages of the supply network. It can be:

• one-up: identifying immediate suppliers;
• one-down: identifying immediate customers or destinations;
• chain traceability: following a specific product or batch;
• mass balance: accounting for quantities entering and leaving a system without proving that each physical unit is segregated;
• identity preserved: maintaining product identity through every stage.

Each model provides different assurance. A digital ledger cannot make an unverified claim reliable; technology records data but does not guarantee that the input was truthful. Traceability systems should define data owners, verification methods, access rights, retention periods, privacy safeguards and procedures for correcting errors.

Supplier selection should use weighted criteria rather than price alone. A simple score may be represented as:

where S is the supplier’s composite score, w_j is the weight assigned to criterion j, and r_j is the normalised rating for that criterion. Weights should sum to 1, ratings should use a documented scale, and criteria should not be double-counted. A composite score must not permit a high delivery score to compensate automatically for severe forced-labour evidence; certain issues should be treated as non-compensatory red lines requiring escalation.

7. Ethical Decision-Making in Supply Chains

Ethical decisions often involve conflicting objectives: continuity versus suspension, affordability versus worker protection, local employment versus environmental harm, or rapid decarbonisation versus mineral-community rights. Ethical reasoning should be explicit rather than hidden inside a spreadsheet.

A practical decision process is:

1. Identify affected stakeholders and the decision’s time horizon.
2. Establish facts, uncertainties and competing claims.
3. Identify duties, rights, laws, contracts and organisational commitments.
4. Assess consequences, including distributional effects and irreversible harms.
5. Consider alternatives, including redesign, remediation, transition support and responsible disengagement.
6. Document the rationale, decision authority and monitoring plan.
7. Provide remedy and revise the decision when evidence changes.

Three complementary ethical lenses are useful. A rights-based lens asks whether fundamental rights are respected. A consequence-based lens compares likely benefits and harms. A justice-based lens asks who bears costs and who receives benefits. Virtue and care perspectives add questions about integrity, responsibility and relationships. No lens should be used mechanically; legal compliance is a minimum, not the complete ethical standard.

Responsible disengagement is different from abrupt exit. Ending a relationship may be necessary where harm is severe and unremedied, but sudden withdrawal can eliminate jobs and reduce visibility. Where feasible, buyers should use leverage, corrective action, worker protection and transition planning before disengagement.

8. Risk Assessment and Performance Management

A sustainability risk register should record the hazard, affected stakeholders, exposure, existing controls, evidence quality, owner, time horizon, residual risk, treatment and escalation route. Conventional likelihood–impact matrices can help prioritise, but they should not obscure uncertainty or allow severe rights violations to appear acceptable merely because probability is difficult to estimate.

Risk treatments include avoidance, reduction, transfer, acceptance and opportunity creation. Examples are redesigning a product, diversifying a water-intensive process, investing in supplier energy efficiency, purchasing insurance for selected physical risks, holding strategic inventory, or developing a lower-impact material.

Performance indicators should combine leading and lagging measures:

Targets should specify baseline, boundary, date, responsible owner, method and verification. Claims should distinguish measured reductions from offsets or avoided emissions. Progress should be reported with uncertainty and methodological changes rather than presented as artificially precise.

9. Technology, Data and Artificial Intelligence

Satellite imagery can support deforestation and land-use monitoring; sensors can measure energy, water and temperature; digital product passports can communicate material and repair information; analytics can identify unusual purchasing, shipment or labour patterns. AI can help classify supplier documents, prioritise assessments and detect anomalies.

However, technology introduces risks. Poor-quality training data can reproduce geographic or linguistic bias. Automated scoring can penalise small suppliers with limited reporting capability rather than actual poor performance. Worker surveillance can violate privacy and chill reporting. Blockchain or immutable records can preserve inaccurate data. Organisations should maintain human review, explainability, access controls, data minimisation, cybersecurity and appeal processes. AI should support—not replace—worker engagement, expert judgement and accountability.

10. Illustrative Case: Apparel Supplier Climate and Labour Risk

Background

A fictional apparel retailer, Northstar Clothing, sources cotton garments through 140 tier-one factories in South and Southeast Asia. Its commercial strategy depends on short lead times and frequent product changes. A customer investigation alleges excessive overtime, recruitment fees charged to migrant workers and falsified audit records at several factories. At the same time, heat waves and water shortages are affecting dyeing facilities.

Problem

Northstar’s existing programme relies on annual announced audits and a supplier code of conduct. Its supplier database contains tier-one names but limited information about labour agents, farms, dye houses and subcontractors. The procurement team is measured primarily on unit price and on-time delivery. Management considers cancelling all implicated suppliers but is concerned about worker job losses and product shortages.

Analysis

The case contains interacting risks: human-rights harm, heat and water exposure, reputational damage, legal restrictions on imported goods, data-integrity failure and concentration risk. The alleged harms are severe because recruitment debt and coercion may restrict freedom. Audit completion is a weak control because records were allegedly falsified. Commercial pressure may be a contributing factor if unrealistic lead times encourage overtime and subcontracting.

Approach and solution

Northstar should first protect affected workers through confidential interviews, repayment of recruitment fees, access to remedy and immediate controls on retaliation. It should commission independent investigation while preserving evidence. Suppliers should disclose subcontractors, labour agents, production volumes and facility locations, with verification based on risk rather than self-reporting alone.

The retailer should revise purchasing practices: provide realistic forecasts, reduce last-minute changes, pay on time, include labour costs in price negotiations and prohibit unauthorised subcontracting. It should assess factory heat and water plans, support energy and cooling improvements, and develop alternative production capacity in less exposed locations.

A supplier may remain in the network where the retailer has leverage and a credible improvement plan. Severe, deliberate deception or continuing coercion may require responsible disengagement. Contract terms should require data access, non-retaliation, remediation and flow-down obligations, but contractual wording must be supported by resources and monitoring.

Outcome

After twelve months, the illustrative retailer has identified additional upstream facilities, repaid recruitment fees for verified cases, reduced unauthorised subcontracting, introduced worker hotlines and changed buyer incentives. Two suppliers remain under enhanced monitoring; one is exited after refusing remediation. Northstar reports fewer late production changes and improved heat-management controls, while acknowledging that full traceability and outcome assurance remain incomplete.

Learning points

The case demonstrates that responsible supply chains require more than audits and supplier codes. Purchasing behaviour can cause or contribute to harm. Worker voice is essential evidence. Climate adaptation and human-rights management can be connected. Exit decisions should consider remedy, leverage and consequences. Credible reporting includes unresolved uncertainty.

11. Challenges and Limitations

Sustainability management faces persistent limitations. Supply chains are dynamic, and tier-two and tier-three visibility is expensive. Data may be estimated, inconsistent or commercially sensitive. Standards and legal requirements vary across jurisdictions. Carbon accounting can involve boundary choices that change apparent performance. Certifications may improve practices but can also create false assurance if scope, chain of custody and audit quality are weak.

Trade-offs are unavoidable. Nearshoring may reduce transport exposure but increase cost or shift environmental impacts. Recycling may require energy and create lower-quality material. Supplier consolidation can improve oversight but increase concentration risk. Renewable-energy projects may affect land rights. Managers should disclose assumptions, compare alternatives, conduct sensitivity analysis where material and engage affected stakeholders.

Greenwashing and social-washing arise when communication exaggerates benefits, omits material harms or uses vague claims. Claims should be specific, evidence-based, comparable and proportionate to the actual boundary. Independent assurance improves credibility but cannot compensate for a poorly designed control system.

12. Best-Practice Implementation Roadmap

A practical implementation sequence is:

1. Obtain board and executive commitment and define accountability.
2. Establish a value-chain map and identify critical commodities, sites and stakeholders.
3. Conduct double-materiality and climate scenario assessments.
4. Set policies, prohibited practices, escalation rules and remedy commitments.
5. Integrate ESG and human-rights criteria into sourcing, design, contracts and incentives.
6. Build traceability proportionate to risk and protect sensitive information.
7. Combine supplier data, worker voice, site evidence and contextual research.
8. Prioritise prevention, mitigation and adaptation investments.
9. Measure outcomes, verify important data and review unintended consequences.
10. Communicate transparently, including limitations, unresolved issues and corrective action.

The most mature organisations treat sustainability as a capability embedded in operating decisions, not as a separate annual-reporting exercise. They develop supplier relationships while retaining consequences for misconduct, use risk-based controls, and connect resilience with justice and long-term value.

Chapter Summary

Sustainability, climate, ethics and responsible sourcing are central to contemporary supply chain risk management. Climate risk includes physical hazards and transition pressures; environmental risk also includes water, biodiversity, pollution and resource depletion. Social and human-rights risks require risk-based due diligence, worker engagement, prevention, mitigation and remedy. ESG and materiality frameworks help prioritise issues, but scores and audits cannot replace evidence or judgement.

Traceability improves visibility when its boundaries, verification methods and limitations are clear. Circularity involves product and process redesign, repair, reuse and recovery rather than recycling alone. Ethical decisions should examine rights, consequences, justice, stakeholder impacts and responsible disengagement. Governance, incentives, data quality and transparent communication determine whether policies become actual performance. Technology and AI can strengthen monitoring but introduce privacy, bias, cybersecurity and accountability risks.

Key Terms

Climate risk: The possibility of physical climate effects or low-carbon transition changes causing harm.

Physical risk: Loss arising from acute or chronic climate hazards.

Transition risk: Risk arising from policy, technology, market and behavioural changes during economic transition.

ESG: Environmental, social and governance factors used to organise performance and risk information.

Materiality: Significance of an issue to decisions, enterprise value, people or the environment.

Double materiality: Assessment of both financial effects and the organisation’s impacts on people and nature.

Due diligence: Ongoing process to identify, prevent, mitigate, remedy and communicate adverse impacts.

Human-rights risk: Risk of adverse effects on recognised human rights.

Responsible sourcing: Procurement conducted with attention to social, environmental and governance impacts.

Traceability: Ability to follow products, materials or transactions through defined supply-chain stages.

Mass balance: Quantity-based accounting system that does not necessarily segregate physical materials.

Circular economy: System designed to reduce resource extraction, waste and product loss through restorative loops.

Scope 1 emissions: Direct emissions from owned or controlled sources.

Scope 2 emissions: Indirect emissions from purchased energy.

Scope 3 emissions: Other indirect value-chain emissions.

Worker voice: Mechanisms enabling workers to express concerns and influence decisions safely.

Remediation: Action to correct or compensate for adverse impacts.

Greenwashing: Misleading presentation of environmental performance or benefits.

Residual risk: Risk remaining after controls and treatments.

Review Questions

5 Short Answer Questions

1. Distinguish physical climate risk from transition risk.
2. Why is a supplier audit not sufficient evidence of responsible sourcing?
3. Define double materiality.
4. What is the difference between traceability and mass balance?
5. Identify two risks created by circular supply chains.

5 Long Answer Questions

1. Explain how climate risk can affect supply-chain design, sourcing and logistics decisions.
2. Describe the stages of human-rights due diligence and explain the role of remedy.
3. Evaluate the advantages and limitations of ESG scoring in supplier selection.
4. Discuss how purchasing practices can contribute to labour and human-rights risks.
5. Explain how governance, incentives and assurance can reduce greenwashing.

3 Analytical / Application Questions

1. A company reports declining emissions intensity while production volume doubles. Analyse why absolute emissions may still increase and recommend additional performance measures.
2. A strategic supplier is accused of forced labour but is located in a region where immediate exit would affect thousands of workers. Develop an ethical and risk-management decision process.
3. Design a responsible-sourcing dashboard for a high-risk electronics supply chain. Specify indicators, data sources, escalation thresholds and limitations.

Multiple Choice Questions with Answers

Question 1

Which of the following is a transition risk?

A. A flood damaging a distribution centre

B. A new carbon price increasing production costs

C. A heat wave reducing worker productivity

D. A cyclone closing a port

Correct Answer: B. A new carbon price increasing production costs

Question 2

In the emissions equation E = A × EF, what does EF represent?

A. Financial exposure

B. Energy frequency

C. Emissions factor

D. Environmental funding

Correct Answer: C. Emissions factor

Question 3

Why should a fall in emissions intensity not automatically be interpreted as a fall in total emissions?

A. Intensity cannot be measured

B. Production volume may increase sufficiently to raise absolute emissions

C. Emissions factors are always zero

D. Intensity applies only to Scope 1 emissions

Correct Answer: B. Production volume may increase sufficiently to raise absolute emissions

Question 4

Which practice best reflects human-rights due diligence?

A. Conducting one announced audit and closing the issue

B. Selecting only the cheapest supplier

C. Identifying impacts, taking action, tracking results and providing remedy

D. Transferring all responsibility through a contract

Correct Answer: C. Identifying impacts, taking action, tracking results and providing remedy

Question 5

What does identity-preserved traceability imply?

A. Only total purchased quantities are recorded

B. Specific product identity is maintained through the chain

C. Materials are mixed without accounting

D. Only the final customer is identified

Correct Answer: B. Specific product identity is maintained through the chain

Question 6

Which statement about circular supply chains is most accurate?

A. Circularity means recycling all products

B. Circularity focuses only on reducing transport

C. Circularity can include durability, repair, reuse and remanufacturing

D. Circularity eliminates all operational risk

Correct Answer: C. Circularity can include durability, repair, reuse and remanufacturing

Question 7

Why can a composite supplier score require non-compensatory controls?

A. All criteria are impossible to measure

B. Severe forced-labour evidence should not be offset by good delivery performance

C. Weights must always be equal

D. Supplier scores are unrelated to risk

Correct Answer: B. Severe forced-labour evidence should not be offset by good delivery performance

Question 8

Which is a leading sustainability indicator?

A. A recorded environmental fine

B. A workplace fatality

C. A completed climate adaptation action

D. Historical landfill waste

Correct Answer: C. A completed climate adaptation action

Question 9

What is a major limitation of using AI for supplier-risk assessment?

A. AI cannot process documents

B. AI outputs may reproduce bias in the underlying data

C. AI always requires no human oversight

D. AI makes cybersecurity irrelevant

Correct Answer: B. AI outputs may reproduce bias in the underlying data

Question 10

Responsible disengagement from a supplier should generally consider which factor?

A. Only the buyer’s short-term price reduction

B. Whether withdrawal could worsen worker impacts and whether remediation has been attempted

C. Whether the supplier has the lowest transport cost

D. Whether the supplier has no written contract

Correct Answer: B. Whether withdrawal could worsen worker impacts and whether remediation has been attempted