Last year Track Record Global completed a consultancy project for a major actor in the global mining industry on the problems and challenges associated with sustainable supply chains, and the establishment of a responsible sourcing program throughout the minerals supply chain. At TRG we drew on our background and expertise in construction, timber, other natural raw materials, and the consumer and household goods market sectors.
Customers are increasingly looking for assurance that the materials or products they buy have been extracted and produced in an environmentally and socially responsible manner. Chain of Custody practices and traceability measures are essential. Traceability is the ability to identify and trace the history, distribution, location, and application of products, parts, materials, and services. A traceability system records and follows the trail as products, parts, materials, and services come from suppliers and are processed and ultimately distributed as final products and services[1].
In order to have value at the market end of geographically long, complex value chains, claims about responsible sourcing have to be underpinned by practical and transparent processes. Claims that have no credibility are counter-productive and damage brands. Businesses that practice ‘greenwashing’ (making sustainability claims that cannot be proven) will be targeted by eNGOs.
Traceability and chain-of-custody (CoC) systems can provide a key mechanism for demonstrating that ‘responsibly sourced’ raw materials are those used to manufacture part or all of the finished goods (carrying a ‘responsibly sourced’ claim) traded at the market end of the value chain. CoC or other traceability mechanisms, when appropriately implemented, will provide independently verifiable means for value chain actors to link the relevant responsible sourcing attributes to the relevant products. Traceability systems facilitate preservation of the inherent (responsibly sourced) qualities in the product – even though the products may be transformed and change location, ownership etc. – as it passes down the value chain to the final market place. Traceability systems thereby convey the responsibly sourced attributes of materials or products, or components of products, from one end of the value chain all the way to the end consumer. This enables the all value chain actors to benefit from the conserved ‘responsibly sourced’ quality in the product being traded.
There is a range of traceability programs linked to existing responsible sourcing initiatives, for instance in the: soya bean (RTRS); palm oil (RSPO); minerals and diamonds (RJC); and forestry sectors (FSC, PEFC).
CoC procedures found in the forestry sector (FSC), in particular as applied to the pulp and paper industries, include: purchasing and sales documentation; physical identification (bar coded tags, radio frequency identification devices etc.,) and segregation/separation of products; and volume/mass control required at each step in the supply chain – at each critical control point (where product changes ownership and/or physical composition). The FSC also introduced an online timber traceability platform in order to improve communication between certified companies. These approaches are broadly applicable to other raw materials where the physical movement of product at critical control points must be independently verified, to ensure legitimate claims.
Consumer demand for verified responsibly sourced products has become the new normal –according to a study conducted in 2013, 87 percent of global consumers are “very likely” to consider a company’s social and environmental commitment before deciding what to buy and where to shop, and 90 percent of global consumers want companies to go beyond the minimum standards required by law to operate responsibly and address social and environmental issues[2]. Traceability approaches and procedures will continue to evolve with the development of new technologies, and as market demand for responsibly sourced products increases and spreads to new sectors – but you can expect Track Record Global to remain at the forefront of commercial expertise in this area!
[1] Praxiom Research Group Limited (2013), ISO Definition Traceability, http://www.praxiom.com/iso-definition.htm#Traceability.
[2] 2013 Cone Communications/Echo Global CSR Study – http://www.conecomm.com/stuff/contentmgr/files/0/fdf8ac4a95f78de426c2cb117656b846/files/2013_cone_communicationsecho_global_csr_study.pdf