Professional Ethics & Governance Flashcards

A manager discovers that the firm's sustainability report overstates progress on carbon reduction goals. This practice is commonly called:

Answer: Greenwashing

Greenwashing is the practice of making misleading or exaggerated claims about environmental performance to appear more sustainable than the organization actually is.

Which of the following scenarios BEST illustrates the ethical concept of 'moral hazard' in an organizational context?

Answer: Executives taking on excessive risk because they believe losses will be absorbed by shareholders or taxpayers

Moral hazard arises when a party takes on more risk because they do not bear the full consequences of that risk themselves.

The principle of 'separation of powers' in corporate governance is BEST achieved through which structural mechanism?

Answer: Separating the roles of CEO and board chairperson

Separating the CEO role from the board chair prevents one individual from dominating both management execution and board oversight functions.

A supplier offers a manager an all-expenses-paid trip to a resort under the guise of a 'product training seminar.' The manager should FIRST:

Answer: Consult the company's gift and entertainment policy before accepting

Policy consultation is the required first step, as company gift and entertainment policies define what is permissible and what process must be followed.

In Kohlberg's stages of moral development, a manager who follows company rules strictly because they fear punishment is operating at which level?

Answer: Pre-conventional (self-interest)

Pre-conventional moral reasoning is driven by self-interest and fear of punishment rather than internalized ethical principles or social norms.

Which governance document typically outlines the scope of authority, membership composition, and meeting requirements for a board committee?

Answer: Committee charter

A committee charter is the governing document that specifies a board committee's purpose, authority, membership, and operating procedures.

A company faces pressure from its largest shareholder to cut the ethics and compliance budget to improve short-term earnings. The board's MOST appropriate governance response is to:

Answer: Evaluate the long-term risk implications and resist cuts that undermine compliance integrity

The board's fiduciary duty includes protecting the organization from long-term risks, and dismantling compliance infrastructure creates legal and reputational exposure that outweighs short-term savings.