The Future of Chain of Custody Certification

Certification beyond EuropeChina’s increasing importance as the processing country for Europe and North America has brought with it a growing hunger for raw material in the booming Asian countries. Forest certification, introduced 20 years ago, intended to incentivise better tropical forest management but it largely became a phenomenon of the western countries themselves. Certification standards advanced in Europe and North America, serving the eco-concerned niche markets with timber products sourced from well managed forests and controlled mills.Asia’s dominance in the market changes things; supply chains of certified products are globalising and highly complex. Certified timber is being produced in more and more countries, shipped around the globe to be processed in cheap labour countries like China and Vietnam before being shipped again to the final markets.Criticisms of Chain of Custody certificationWhile forest management and Chain of Custody (CoC) certification has been tested during its first decade in “safe” environments in Europe and North America, implementing and maintaining certificates in “medium” and “high” risk countries is far more challenging. This globalisation of supply chains has put the concept of forest and CoC certification under severe stress for the last decade.Certification schemes have always remained under high pressure by stakeholders and the evolving market to adapt their standards and systems. PEFC and FSC are remarkable in their openness to consider and respond to stakeholder perceptions and experiences, which is quite unique in the sector of sustainability certification. They operate the most credible sustainability certification schemes worldwide. The best schemes, however, are not immune to abuse and fraud in a world where 50% of the products traded on the global market are fakes.Recent stakeholder criticism of FSC and PEFC relates to this concern on CoC certification and target the lack of monitoring of the certified product flow. Chain of custody certification only confirms that the company theoretically has the capacity and right to handle certified products, but in practice they may not handle any certified raw material at all. Given that CoC audits are only snapshots of the situation undertaken once a year in announced audits, it is virtually impossible for auditors to detect fraud and false labelling that might have occurred throughout the year. As Scott Poynton has highlighted, the explosion of certificates being issued, in particular in China, has seen the scheme being abused as a means to falsely promote wood as FSC or PEFC. Companies help themselves to those certified labels to “green” their enterprise; the pre-announced audits can only provide a brief snapshot of their CoC system.

The increasing complexity of supply chains, concerns over false labelling and the absence of monitoring of the product flow in the supply chain are key issues facing CoC certification. However, we must not abandon the fundamental concept of forest and CoC certification. No short-term alternatives currently exist to control an environmentally and socially responsible trade in wood products. Even in the context of the EU Timber Regulation, the most efficient and safest means the European timber industry can prove compliance is to purchase certified or those products produced in low risk countries. Particularly as no Voluntary Partnership Agreement (VPA) licenses have been issued yet verifying the legal origin of timber from VPA countries, as has been highlighted by Jade Saunders in her Chatham House report.New solutionsSo let’s not condemn CoC certification, instead see it as the crucial tool it is. Indeed, solutions have already been proposed to make it a safer mechanism in an increasingly demanding and complex environment. These solutions relate to more due diligence, regular independent controls in factories, and monitoring and documentation of actual movement of certified products through supply chains using traceability capabilities. Various organisations are offering important services to fill the gaps in the current CoC implementation, such as Nepcon, Bureau Veritas, SGS, TFT, Efeca and Rainforest Alliance. They offer hands on support throughout supply chains with due diligence implementation and verification, partly supported by IT solutions.In house due diligence and traceability systems have become an increasing necessity to the timber product industry, largely due to new legislation. The Lacey Act, EU Timber Regulation and the American Logging Bill have raised the bar for sourcing responsible timber products. While companies still try to generate most responsible products using certified raw material, demand is increasingly outstripping supply; the volumes of certified timber are not enough. To source more responsible and legal material, companies can use their own due diligence or traceability system to satisfy legislative requirements.These solutions and approaches are all important pieces of the puzzle for solving responsible sourcing issues. They all have their regional, product or industry strengths. However, because service providers, certification schemes and organisations all use slightly different approaches it remains a challenge for businesses to adopt. The methods, types of information gathered and systems used, for example, may not fit a company’s own internal system and data management ideally.On the one hand, competition is important and differences between approaches and systems must remain. On the other, the multitude of different systems – with slightly differing concepts and approaches – makes it incredibly demanding to maintain the reporting and documentation requirements.Radix Tree – taking Chain of Custody certification into the futureThe platform Radix Tree is a means to overcome this challenge, taking due diligence, CoC and forest certification into a new decade. Radix Tree is a multi-stakeholder platform for implementing real time product traceability and sustainability reporting; connecting you with your entire supply chain at the same time. The platform provides the opportunity to serve all stakeholders involved in the due diligence process within the supply chain, be it clients, authorities or sustainability services providers. Radix Tree is a unique means to consolidate the many puzzle pieces of due diligence and sustainable sourcing into one single approach of data management.Imagine Radix Tree to be a social network in a highly protected environment where you have full control over your data. You can manage information relevant to your environmental or social responsibility reporting and you can decide with which partner organisation you share which piece of information. Radix Tree can be used to share information between one tier of your suppliers and clients or to trace a product’s entire journey from source to store. The system allows you to do exactly what serves your sustainability reporting, due diligence system and certification purposes.

In practice, it means a user can document certified products streams through real-time product traceability for any CoC system they’re involved in – if, when and where necessary. In one and the same account the user can also trace uncertified product flows – for their in house due diligence implementation, for example. Any other product or company information important to business or sustainability partners can be managed in parallel to all other activities on the platform. Radix tree is not limited to specific schemes and programs; its interface is easy to adapt to the requirements of any program, certification scheme, supplier, client, certification body or public procurement agency. It represents the most cost efficient and easy solution to the issues outlined above.Case example
Best Papers is PEFC certified and a user on the Radix Tree platform. After each follow up audit PEFC updates Best Papers’ certificate information, this updates are in real time on their Radix Tree account.

Best Papers also uses Radix Tree for its sustainability reporting to its client Best Foods.

Best Foods requires bi-annual updates on the sustainability characteristics of the packaging material they buy from Best Papers.

Best Papers reports those on a product level to Best Foods.

Best Papers can choose to share their PEFC information to Best Foods which massively adds to the sustainability credibility of the products and save Best Foods a lot of time to obtain this information.
ReferencesJade Saunders and Rosalind Reeve, The EU Timber Regulation and CITES, Chatham House, 1st April 2014 Poynton, Beyond Certification, Do Sustainability, Sedition Publishing, May 2015