CEP Governance Structures & Ethical Practices 2

Question 1

Which board committee is primarily responsible for overseeing a company's ESG risks and sustainability strategy?

Accepted Answer

Sustainability or ESG Committee

Answer

A dedicated Sustainability or ESG Committee holds primary board-level responsibility for overseeing ESG risks and strategy.

Question 2

What governance principle requires that the individuals who authorize transactions are different from those who record or reconcile them?

Accepted Answer

Segregation of duties

Answer

Segregation of duties is an internal control principle that separates authorization, recording, and custody functions to reduce fraud risk.

Question 3

In ESG governance, what does 'tone at the top' primarily refer to?

Accepted Answer

Senior leadership's commitment and behavior toward ethical standards

Answer

'Tone at the top' refers to the ethical climate established by senior leadership through their attitudes, behaviors, and communications.

Question 4

Which UN framework specifically guides multinational enterprises on human rights due diligence in their governance practices?

Accepted Answer

UN Guiding Principles on Business and Human Rights (UNGPs)

Answer

The UN Guiding Principles on Business and Human Rights (UNGPs), known as the Ruggie Framework, establish the corporate responsibility to respect human rights.

Question 5

A company's board has a majority of directors who previously worked at the company's main audit firm. Which governance concern does this raise?

Accepted Answer

Board independence

Answer

Board independence is compromised when directors have prior relationships with the company or its service providers, reducing objective oversight.

(CEP) Certified Environmental, Social, and Governance (ESG) Planner Practice Test

(CEP) Certified Environmental, Social, and Governance (ESG) Planner Practice Test

CEP Governance Structures & Ethical Practices 2