A Guide To Traceability: A Practical Approach To Advance Sustainability in Global Supply Chains

A Guide to Traceability
A Practical Approach to Advance Sustainability in Global Supply Chains

About the United Nations Global Compact
Launched in 2000, the United Nations Global Compact is both a policy platform and a
practical framework for companies that are committed to sustainability and responsible
business practices. As a multi-stakeholder leadership initiative, it seeks to align business
operations and strategies with ten universally accepted principles in the areas of hu-
man rights, labour, environment and anti-corruption, and to catalyze actions in support of
broader UN goals. With 8,000 corporate signatories in 145 countries, it is the world’s largest
voluntary corporate sustainability initiative.
www.unglobalcompact.org
About BSR
BSR works with its global network of more than 250 member companies to build a just
and sustainable world. From its offices in Asia, Europe, and North and South America, BSR
develops sustainable business strategies and solutions through consulting, research, and
cross-sector collaboration. Visit www.bsr.org for more information about BSR’s more than
20 years of leadership in sustainability.
Disclaimer
This publication is intended strictly for learning purposes. The inclusion of company or
organization names and/or examples does not constitute an endorsement of the individual
companies by the United Nations Global Compact Office or BSR. The material in this pub-
lication may be quoted and used provided there is proper attribution. The views expressed
in this publication are those of its authors and do not reflect those of BSR members or UN
Global Compact participants. The UN Global Compact encourages the dissemination of the
content for education purposes.
About this Guide

The findings in this report are based on the following: interviews with company, traceability
scheme and Non-Governmental Organization representatives; a survey of UN Global Com-
pact Supply Chain Advisory Group members; and a desktop review of literature, case stud-
ies and analysis of traceability information. Extensive consultation was also conducted to
ensure the usefulness and content of this guide. The UN Global Compact and BSR express
their deep appreciation to all those who have contributed to this project.
BSR developed this report with the support of the UN Global Compact. Members of the UN
Global Compact Advisory Group on Supply Chain Sustainability provided significant editorial
input. The Office of the High Commissioner for Human Rights provided input on how to align
the guide with the Guiding Principles on Business and Human Rights endorsed by the UN
Human Rights Council. Any errors that remain are those of the authors.
BSR team: Tara Norton, Julia Beier, Lauren Shields

UN Global Compact team: Anita Househam, Elena Bombis, Daniella Liew
Designers: Nilou Safavieh, Tannaz Fassihi
© Copyright 2014
United Nations Global Compact Office
Two United Nations Plaza, New York, NY 10017, USA
Email: globalcompact@un.org
Table of Contents
Introduction4
Part 1: Global Alignment on Traceability 6

1. Definition: Traceability 6
2. The Evolution of Traceability 6
3. The Impact of Traceability 7
Part 2: Traceability in Practice 10

1. Traceability Models 10
2. The Landscape of Global Collaborative
Traceability-Focused Organizations 15
3. Best Practice in Traceability 18
Part 3: Practical Guide for Companies

to Pursue Traceability 20
1. Drivers and Benefits 20
2. The Practicalities of Traceability:
Implementation in Seven Steps 24
3. Alternatives to Traceability 26
4. Keys to Successful Implementation:
Helpful Advice from Peers 29
Conclusion and Outlook for the Future 31
Annex: Traceability by Commodity:

Gaps and opportunities for collaboration 32
End Note 44
4 A Guide to Traceability
Introduction
The UN Global Compact and BSR are pleased stakeholders the benefits of working together
to issue this guide to help companies and to implement a common approach to trace-
stakeholders understand and advance supply ability across commodities.
chain traceability, which is the process of iden-
tifying and tracking a product or component’s Summary of the Guide
path from raw material to finished good. This guide is divided into three sections:
This guide represents more than a year of
work in preparation, research and interviews. • In Part 1, the guide defines traceability
and explores its history, benefits and chal-
Purpose lenges, including an overview of current
The purpose of this guide is to provide an collaborative schemes on traceability.
overview of the importance of traceability for • In Part 2, the guide demonstrates a model
sustainability purposes, outline the global op- for best practice in traceability, and pro-
portunities and challenges it represents and vides an overview of the different models
summarize practical steps for implementing of traceability and the global initiatives
traceability programmes within companies. operating in the arena.
Research for this guide revealed that trace- • In Part 3, the guide provides guidance to
ability is a tremendously impactful tool for companies around the world, large and
advancing sustainability objectives, but it still small, on how to effectively engage in
has a long way to go before it is an integral traceability.
part of sustainable supply chain management
and is used widely by companies. At present, Target Audience
only a very small percentage of commodities This guide is primarily aimed at supply chain,
are traceable on sustainability attributes. procurement, sourcing and sustainability pro-
Traceability must be a collaborative ef- fessionals who seek to improve the sustain-
fort. This guide aims to show companies and ability of their companies’ supply chains, and
About Supply Chain Sustainability

& the United Nations Global Compact
The UN Global Compact encourages participants to develop more sustainable supply
chain practices, including by engaging with their suppliers around the UN Global Com-
pact Ten Principles. To assist companies in improving the sustainability of their sourcing
policies and practices, the UN Global Compact promotes material initiatives and good
business practices that explore critical issues and has developed guidance on how to
integrate the Ten Principles into supply chain management systems.
To guide its work on supply chain sustainability, the UN Global Compact has established
an Advisory Group of Global Compact participants and stakeholders. The role of the
Advisory Group is to provide input to the overall strategy and work of the UN Global Com-
pact on the issue of supply chain sustainability, and to ensure that the guidance material
developed is robust and addresses the needs of businesses.
The Advisory Group has established task forces to develop various tools and resources to
help businesses integrate the UN Global Compact principles into supply chain relation-
ships. This guidance is the result of the work of the Traceability Task Force.
A Guide to Traceability 5
who are considering traceability. Individuals need global support, and points companies
already engaged in traceability in some way in the direction of offering the right kind of
and those who are new to the topic will gain guidance.
value from this guide.
Our aim is to provide lessons that are Research Methodology
applicable across industries, geographies, in The findings and recommendations in this
reference to a vast range of commodities, and guide are based on the following: a review of
to large multinationals as well as small busi- publically available information, literature
nesses. The real-life case studies and inter- and case studies about supply chain traceabili-
views with practitioners provide companies ty; an analysis of existing traceability schemes;
with concrete examples and clear ways to and interviews with individuals at companies,
implement traceability standards. traceability schemes and NGOs who have
For organizations involved in traceability, significant experience in traceability.
such as traceability schemes and Non-Gov- Interviews were conducted with 12 compa-
ernmental Organizations (NGOs), this guide nies (multinationals), 4 companies (suppliers),
provides a comprehensive overview of the 9 traceability schemes, and 4 relevant NGOs,
traceability landscape and the benefits that using a standard interview template that
these organizations are providing to ensure was then coded and analyzed for trends. UN
the sustainability of products. This guide also Global Compact and BSR wish to acknowl-
calls out key areas where traceability schemes edge and thank all participants.
Part 1
Global Alignment on Traceability
1. Definition of Traceability conflict areas and avoid purchasing materi-

als that can directly or indirectly finance
This guide will use a hybrid of the widely and increase the intensity of those conflicts.
accepted definition of traceability from the Programmes that certify the use of products
International Organization for Standardiza- that are grown in sustainable cultivations,
tion (ISO), with the added key component of a whether they relate to food (e.g. cocoa, nuts
sustainability focus: or coffee) or to other commodities (e.g. cotton
or wood), can have numerous effects on the
Traceability: The ability to identify and trace environment, from the reduction of carbon
the history, distribution, location and application footprint to the prevention of deforestation.
of products, parts and materials, to ensure the
reliability of sustainability claims, in the areas of Definition of Traceability Schemes
human rights, labour (including health and safety), When we refer to “traceability schemes”
the environment and anti-corruption. throughout this document, we are referring to
organizations whose purpose is ensuring the
Background on the definition sustainability of raw materials, for whom trace-
Although traceability schemes have slightly ability plays some role. These organizations are
different definitions for traceability, they all generally labeling or certification organizations,
reference a process by which a product moves and industry or commodity roundtables. It is
from its original raw material extraction and important to note that these organizations are
production phase to the final customer. The at different levels of advancement in terms of
original ISO definition of traceability is “the implementing traceability.
ability to identify and trace the history, distri-
bution, location, and application of products,
parts, and materials”.1 2. The Evolution of Traceability
In order to ensure traceability along the
supply chain, a system is needed that “records The History of Traceability
and follows the trail as products, parts, Traceability dates back to as early as the
and materials come from suppliers and are 1930s when some European countries wanted
processed and ultimately distributed as end to prove the origin of high-quality food such
products”.2 Such traceability systems provide as French champagne.3
information on the components of products, Over the past two decades, food safety re-
parts, and materials as well as information on lated issues and various food scandals in the
transformations throughout the value chain. agribusiness sector, such as mad cow disease
At the end, traceability ensures the accuracy or the Asian bird influenza, have highlighted
of this information, such as product quality, the importance of traceability. The need for
safety and labeling. traceability has also extended to other indus-
In the context of sustainability, traceability tries, due to issues of product quality, safety
is a tool to assure and verify sustainability and security.
claims associated with commodities and In 2005, the European Commission imple-
products, ensuring good practice and respect mented several directives and regulations
for people and the environment all along the on food safety, which increased the focus
supply chain. on traceability in agricultural commodities.
For example, schemes ensuring that These food law guidelines address “traceabil-
minerals are not sourced from conditions of ity of food and feed products, responsibility
armed conflict (known as “conflict minerals”) of operators, withdrawal of unsafe food or
aim to address the human rights abuses in feed from the market and notification to the
competent Authorities”.4
Beyond food safety, consumers, NGOs, gov- 3. The Impact of Traceability

ernments, suppliers and buyers increasingly
demand more information about the origins 3.1. Traceability’s Positive Impact
of their products and materials and the condi-
tions under which they were produced and There is no doubt that traceability schemes
transported along the value chain. With the have become an important part of the
increase in demand for organic, fair trade and sustainability landscape and are growing in
environmentally friendly products and ma- impact and credibility.
terials, well-functioning traceability systems
and new technologies have been developed to Traceability’s Impact on the
meet stakeholder needs. Sustainability of Raw Materials
Traceability has been an invaluable tool for
Traceability for driving tremendous progress to improve the
Sustainability Claims sustainability of raw materials, and a signifi-
Today, traceability is a useful tool for com- cant number of promising statistics are avail-
panies to advance sustainability and prove able to support this.
claims and attributes of sustainable prod- One clear example is in timber. The UN
ucts. Companies undertake traceability reported in its annual review of “Forest
programmes to improve their supply chain Products” that by May 2013 the global area of
management in various ways. forest certified by FSC and the Programme for
Some companies who have a strong the Endorsement of Forest Certification (PEFC)
understanding of their supply chain and amounted to 10 per cent. This reflects an an-
know their main suppliers well have insti- nual relative growth rate of 11.8 per cent in
tuted their own traceability programmes and forest certification, a trend that shows no sign
schemes for certain commodities, often when of slowing.6 Certifications visible on finished
those commodities are a critical resource for timber-based products indicate an ability to
their products. trace back to the source of one of these certi-
Companies and stakeholders in industries fied forests.
with complex supply chains, such as the Moreover, in sustainable fishing, MSC has
agricultural and retail industry, have come certified annual catches of around 10 million
together to build global multi-stakeholder ini- metric tons of seafood, which represents
tiatives in order to trace commodities collab- more than 10 per cent of annual global wild
oratively. These global traceability schemes, capture fisheries. For consumers, achieve-
such as the Forest Stewardship Council (FSC), ments in traceability are visible through the
the Marine Stewardship Council (MSC) or 20,000 seafood products that are traceable
UTZ Certified, have engaged with stakehold- back to certified fisheries.7
ers along the entire value chain in order to There are now 13 countries globally that
develop credible and robust chain of custody are able to supply Better Cotton, and the Bet-
standards and certification for products from ter Cotton Initiative (BCI) Retailer and Brand
the raw material to the final use phase. members represent almost 8 per cent of the
Traceability is not a substitute for due cotton consumption worldwide.8
diligence or the broader scope of the corpo- Even newer initiatives, such as Bonsucro’s
rate responsibility to respect human rights5. sustainable sugarcane and ethanol, are show-
Readers of this guide should be mindful ing results. Bonsucro only issued its first
that traceability schemes may only uncover certificate in 2011. Today it certifies 3.66 per
one set of risks and not all potential adverse cent of the global sugarcane surface with 38
impacts, depending on the specific nature of certificates, which amounts to 871,229.59
the traceability scheme and the issues that it hectares. A preliminary outcome report from
covers. 2013 shows that first Bonsucro certifications
reduced GHG emission by 323 thousand tons
of CO2.
In general, the most recent UTZ certi- HarvestMark, provide consumers with de-
fied impact report on coffee, cocoa and tea, tailed information on the environmental and
released in January 2014, indicates that the social impacts of their products with the aim
implementation of certifications results in of helping consumers make more informed
higher yields for farmers. As one country buying decisions.
study shows, certified farmers in Colombia In addition, there are currently a variety of
were able to maintain higher levels of pro- smartphone applications available that allow
duction compared to conventional farmers. consumers to scan bar codes in order to acquire
The impact of the traceability scheme is more information about their product’s origins
shown by an increase from 52 per cent in the and impacts.
first year to 169 per cent by the fourth year
in terms of production between UTZ certified Traceability Unites Companies
farmers and the control group.9 and Stakeholders Around
a Common Purpose
Traceability as Evidence The most successful traceability schemes
of Good Business Practice are multi-stakeholder, involving business,
Traceability is becoming more of an accepted government, and other stakeholders and civil
practice, and one that companies increasingly society organizations who have an interest
embrace as part of their sustainability activi- in the sustainability of the said commodity12.
ties. The Forest Stewardship Council describes Multi-stakeholder initiatives are complex and
FSC certification as a “license to trade” for require careful governance to manage often
businesses. very divergent points of view. Traceability
In addition, traceability certifications are schemes are proving able to bring – and
becoming validated as proof of sustainability keep – these players together. The focused
requirements. One significant recent devel- purpose of making a specific commodity
opment is that “the EU voted [in January more sustainable is a powerful and uniting
2014] for a set of revised public procurement force for the participating companies and
directives that refer to robust certification stakeholders.
programmes as proof that a company meets
sustainability requirements set out in calls for 3.2. Opportunities to Strengthen
tenders”.10 As more governments and compa- Traceability
nies adopt this stance, traceability becomes
a viable and appealing way for businesses There are current limitations to achieving full
to meet the sustainability requirements and supply chain traceability, which will need to be
expectations of their customers. addressed to increase the impact of traceability.
There is also increasing evidence that con-
sumers are demanding certified and traceable Supply Chain Complexity
products, which is a main driver for traceabil- It is often difficult for companies to trace
ity. For example, “in the United States, 39 per each and every step in the journey of a
cent of those surveyed in 2012 recognize the given product. Multiple actors with different
Rainforest Alliance Certified™ green frog seal, systems and requirements may contribute
30 per cent understand what the certification to production across international borders,
means and 23 per cent indicated they are and some areas in a supply chain may be
more likely to buy a product that carries the especially opaque. This is a complex issue as
Rainforest Alliance Certified seal”.11 traceability requires the engagement and col-
Beyond organic and fair trade labels, laboration of actors along the entire supply
among others, there are various tools and chain to trace a product’s history. Develop-
resources available for consumers to obtain ments in technology and demands for greater
more information on the origin and manu- transparency from both business and govern-
facturing process of their products along ment sectors are making this increasingly
the supply chain. Various online consumer more manageable.
guides and websites, such as GoodGuide,
GreenerChoices.org, Ethical Consumer and
Availability and Scale of Certified, Alignment around tools helps reduce costs
Traceable Products to individual actors. When collaboration is
The number of traceable products in any widespread, there is greater incentive for actors
given category is limited due to the complex- to work together, which lowers cost overall.
ity of traceability. Obtaining fully traceable
materials or components is not possible in Further Developments in
many cases, particularly for large compa- Technology Needed to Support
nies. To address these challenges, companies Traceability Schemes
need to push for and support the continued In order to achieve full traceability, various
expansion of traceability schemes. This will levels of verification are needed at all stages
gradually ensure a greater quantity of the throughout the supply chain. This means
certified commodities a company’s products that supply chain actors need to collect and
require, as well as increase the sustainability validate data and commit to chain of custody
of overall product lines. standards. Technological platforms, bar codes,
The challenge of full traceability is par- and chips represent some technological
ticularly acute for companies manufacturing advances; however, mastering these technolo-
complex products with multiple tiers of sup- gies for traceability purposes is a challenge.
pliers or numerous sources at any given tier. Since suppliers are located throughout the
world and sometimes in remote areas, there
Costs for All Supply Chain Actors are language, skill and access barriers to fully
Traceability requires substantial investment using technology. In addition, there are also
in technology and processes aimed at track- challenges around ensuring that data systems
ing goods along the supply chain. In addition, are secure for all users.
coordination between different supply chain While technology and tools are develop-
actors requires time and willingness on all ing, the pace of these innovations needs to
sides. These costs are a concern for many ac- increase significantly. For providers of these
tors pursuing traceability. technologies, cost is still proving a difficult
and related barrier.
Part 2
Traceability in Practice
1. Traceability Models Models with less stringent controls around

the handling of certified and non-certified
materials are less complex and thus less ex-
There are three main models in terms of
pensive. However, wherever possible, the type
how traceability schemes trace sustainability
of certification and the model of traceability
claims. These models offer different ap-
used should depend on the sustainability
proaches to tracking a claim and assuring it
claims and the materials being traced rather
at each point in the supply chain.
than the cost of implementing the model.
The three models are Product Segregation,
Product segregation is best suited and should
Mass Balance, and Book and Claim (see image
be prioritized, when possible, if there is a risk
below). They are differentiated by the extent
of being involved in human rights or labor
to which certified and non-certified materials
abuses when sourcing a certain commodity.
are permitted to mix, as well as by claims that
The Mass Balance and Book and Claim models
can be attached to the final product.
are open to criticism for commodities where
Product Segregation is available.
Supply Chain Traceability Types
Traceability Models
Product Mass Balance Book and Claim

Segregation
Bulk Identity
Commodity Preservation
1.1 Product Segregation Identity Preservation

The Product Segregation model implies that The Segregation model of Identity Preserva-
certified materials and products are physical- tion (IP) requires segregation of the certified
ly separated from non-certified materials and material from the non-certified material and
products at each stage along the value chain. doesn’t allow mixing of certified materials
This ensures that certified and non-certified throughout the value chain to provide trace-
materials and products are not mixed and ability from a specific plantation or primary
that the end product comes from a certified processor to the final users. The IP model en-
source. At the end, consumers know that 100 ables the traceability of products back to the
per cent of their products consist of certified originating farm, forest or production site.
materials.
There are two segregation models to
traceability: Bulk Commodity and Identity Bananas
Preserved (IP). Identity preservation has been possible in the
case of Fairtrade bananas, where a physical
Bulk Commodity link between smallholder producers and con-
The segregation model of Bulk Commodity sumers has been achieved.13
separates certified from non-certified materi-
als but allows mixing of certified materials
from different producers. All producers must The IP model is sometimes criticized for being
comply with the certification standards. cost and resource intensive and requiring ad-
vanced technology since all material sources
must be strictly separated, controlled and
Organic Produce
monitored at each stage of the supply chain.
The Segregation model is important to the Companies must know all their suppliers and
organic produce sector, where organic and non- collect and verify data at all levels throughout
organic fruits and vegetables are strictly sepa- the supply chain.
rated. However, organic items from different
farms and producers are regularly combined
in order to achieve supply on a large scale. Example Identity Preservation:
Despite the bulking from different regions, Organic food
all producers and farmers must commit to In the case of organic food, the end consumer
growing organic food and comply with organic would know the exact farm where the organic
certification standards. food was grown.
Product Segregation
certified
non certified
1.2 Mass Balance Cocoa14

With the Mass Balance model, certified and The cocoa supply chain is very complex and
non-certified materials can be mixed. How- makes the process of complete segregation
ever, the exact volume of certified material expensive to implement for most companies.
entering the value chain must be controlled UTZ Certified offers the Mass Balance system
and an equivalent volume of the certified to boost sustainable production through less
product leaving the value chain can be sold cost, allowing more farmers to benefit from it.
as certified.
This is common for products and com-
modities where segregation is very difficult 1.3 Book and Claim
or impossible to achieve, such as for cocoa, The Book and Claim model is very different
cotton, sugar and tea. from the two models discussed above and
Customers may not know whether their does not seek to have traceability at each
specific share of the product contains certi- stage in the supply chain. Instead, this model
fied or non-certified materials or a mixture of relies on the link between the volumes of
both. Claims of “product contains x per cent the certified material produced at the begin-
of certified ingredients” can be made. ning of the supply chain and the amount of
certified product purchased at the end of the
value chain.
In the Book and Claim model, a company
Timber
can obtain sustainability certificates for the
The Forest Stewardship Council (FSC) aims to
volume of certified materials that it puts into
have all forest products sourced from certified
the supply chain. Certified and non-certified
forests. However, the complex nature of the
materials flow freely throughout the supply
production processes of paper mills and similar
chain. Sustainability certificates are bought
forest products manufactured make segrega-
via a trading platform and can be issued by
tion difficult. FSC allows a Mass Balance model
an independent body.
a set of certified products to contain a mixture
Companies that want to make sustainabil-
of certified and uncertified material and sell
ity claims can purchase such certificates. Even
FSC products on a larger scale.
though it is not certain that their products
contain certified material, their production
MASS BALANCE
Co
80%
Co
co
co
certified
a
20%
non certified
certified
non certified
has supported sustainable sourcing. There-

fore, claims of “product supports the sustain- Renewable Energy Certificates 16
able sourcing and production of essential Companies producing power from renewable energy
commodities” can be made. projects (e.g. solar panels, windmills) can feed their
green energy into the electrical grid and receive Renew-
Book and Claim Trading Platform able Energy Certificates (REC) in return. Once in the grid,
The company Book & Claim Limited, located renewable energy is impossible to separate from the
in the United Kingdom, is an example of a conventionally generated energy.
Book and Claim trading platform and issuing
body. This trading platform aims to over- RECs can be exchanged, sold and traded, and the owner
come the logistical complexities of imple- of the REC can claim to have purchased renewable en-
menting traceability programmes in global ergy. RECs incentivize carbon-neutral renewable energy
supply chains and is based on the principle by supporting electricity generated from renewable
that “the best way to encourage producers sources.
to operate sustainably is to reward them for The purchase of RECs allows its owners to claim that
doing so”.15 their purchased energy was generated from an eligible
Producers who prove through assessment renewable energy resource.
that they operate sustainably can register
the quantity of their sustainable products
via an online trading platform and receive
certificates in return. These sustainability the end, products do not necessarily contain
certificates are offered for sale on the online certified material but have contributed to sus-
trading platform. Manufacturers and retail- tainable sourcing and production of certified
ers of products containing that commodity material. This enables companies to demon-
can bid for and purchase these sustainability strate their support of sustainable production
certificates online. In doing so, they automati- upstream at grassroots levels.
cally pay a voluntary premium to producers
who operate responsibly and sustainably. For further examples, please see the table
The Book and Claim system enables the at pg. 15 which lists some of the existing
purchase and selling of sustainable commodi- traceability schemes by model. Additional
ties without the need for costly segregation traceability schemes are provided in the next
and tracing throughout the supply chain. At section.
Examples of existing traceability schemes by model17

Product
Segregation Model Mass Balance Model Book and Claim Model
●● Better Cotton Initiative – ●● Better Cotton Initiative – ●● Bonsucro – Credit trading

Physical segregation until the Mass Balance model once system (Book and Claim)
bale of cotton is formed the bale of cotton is broken
and split into yarn
●● RSPO – Book and Claim
●● Fairtrade Labelling Organi- system
zations International (FLO) ●● Bonsucro – Mass Balance
Chain of Custody Standard
●● UTZ Certified –Trading &
– Product segregation for
Traceability Programme used
bananas, other fresh fruits, ●● Fairtrade Labeling Organiza- in collaboration with RSPO
coffee, flowers, nuts, rice and
tion (FLO) – Mass balance
spices
model for cocoa, sugar, tea
●● Forest Stewardship Council and juice
(FSC) – “FSC Pure Products” ●● Forest Stewardship Council
●● Organic Food Labels (FSC) – FSC volume based
system
●● Responsible Jewelry Council
Chain-of-Custody standard ●● Roundtable for Sustainable
Palm Oil (RSPO) – RSPO
●● Roundtable for Sustainable Mass Balance System
Palm Oil (RSPO) – RSPO
Segregated System ●● UTZ Certified – Mass Balance
Traceability Programme
●● Textile Exchange standards
●● UTZ Certified – Traceability
Programme “Segregation
Physical Link”
●● Marine Stewardship Council
(MSC)
2. The Landscape of Global Global Collaborative

Collaborative Traceability- Traceability Schemes
Focused Organizations The table below presents a list of global
collaborative traceability schemes. These
This section offers an overview of existing schemes have different scopes, with some
traceability initiatives that address sustain- providing full certification of sustainabil-
ability issues. Although this landscape is not ity attributes through a chain of custody
intended to provide an exhaustive list of all programme while others offer more general
actors working on traceability, it highlights guidance on traceability.
major collaborative traceability schemes for
each commodity.
Agricultural
Sports balls
Electronics
Vegetables
Diamonds
and herbs
Materials
Recycled
Cashews
products
Titanium
Personal
minerals
Palm Oil
Flowers
Textiles
Conflict
Leather
Timber
Biofuel
Carpet
Cotton
Spices
Coffee
Honey
Cocoa
Sugar
Down
Wool
Wine
Fruit
Toys
Care
Beef
Gold
Rice
Fish
Soy
Tea
Tin
Conflict Free Sourcing Initiative (CFSI) ●
Fair Trade Labelling Organizations ● ● ● ● ● ● ● ● ● ● ● ●

International (FLO)
Forest Stewardship Council (FSC) ●
Global Organic Textile Standard ● ● ●
Global Sustainable Beef Roundtable ●
Good Weave ●
IDH Sustainable Trade Initiative ● ● ● ● ● ● ● ● ● ● ● ● ● ●
International Federation of Organic ●

Agricultural Movements (IFOAM)
ITRI Tin Supply Chain Initiative (iTSCi) ● ●
Kimberley Process ●
Leather Working Group ●
Marine Stewardship Council (MSC) ●
Materials Traceability Working Group ● ●

(of the Outdoor Industry Association)
Programme for the Endorsement of ●

Forest Certification (PEFC)
Rain Forest Alliance ● ● ● ● ● ● ●
Responsible Jewellery Council ● ●
Roundtable for Responsible Soy ●
Roundtable on Sustainable ●
Biomaterials (RSB)
Roundtable on Sustainable ●
Palm Oil (RSPO)
Sustainable Forest Initiative (SFI) ●
TE Organic Content Standard ● ● ●
TE Recycled Claim Standard
TE Responsible Down Standard ●
Tropical Forest Alliance 2020 ●
UTZ Certfified ● ● ●
Other Engaged Organizations 3. Best Practice in Traceability

In addition to the global collaborative initia-
tives, a number of other stakeholders also Companies and stakeholders have realized
support traceability. Of particular note are the that they must work together in collaboration
International Organization of Standards towards achieving the traceability of com-
(ISO), the ISEAL Alliance, World Wildlife modities. A few companies interviewed during
Fund (WWF) and Historic Futures. ISO and the development of this guide disclosed that
ISEAL Alliance are widely recognized organi- their attempts to establish company-specific
zations in setting and maintaining standards traceability schemes were unsuccessful. The
across multiple industries, and Historic Fu- roadblocks were due to two key factors: the re-
tures provides technical support to businesses luctance of suppliers to share information, and
and others working on traceability. the fact that there was a particularly opaque
section of the supply chain, such as when
In-Depth Commodity Overviews there are agents or distributors not prepared
To provide more information about traceabil- to share sources, or a large number of small
ity and how it is playing out for specific com- producers that are difficult to track. Attempts
modities, an in-depth overview of ten com- by the organizations in question to pursue
modities and their key traceability schemes traceability alone did not offer a solution.
and challenges is outlined in the Annex.
The ten commodities covered include:
• Beef • Leather
• Biofuel • Minerals/diamonds
• Cocoa • Palm oil
• Cotton • Sugar
• Fish • Timber
The Model: Collaboration is best practice for traceability

A clear model has emerged of best practice in traceability based on interviews and research conducted in
developing this guide. The model has three distinctive features:
1. One independent, multi-stakeholder Global Collaborative Scheme. This organization provides guidance
and works on commodities to advance traceability.
2. Focus. The traceability scheme is focused on a limited number of issues, both in terms of the number of
commodities and the sustainability attributes that must be traced.
3. Appropriate collaboration along the supply chain. The supply chain actors along the way are partici-
pating in the scheme in a manner appropriate to their position in the supply chain, and are communicating
with their immediate business partners.
Independent, multi-stakeholder
1 Global Collaborative Scheme
2 Focus: One commodity, specific sustainability attributes
●● Responsible for the overall traceability of the commodity ●● Monitors commodity source and each step in the chain of custody
●● Sets standards / certification requirements ●● Ensures the flow of data as appropriate between sources
Producers / Raw 2nd Tier & Beyond 1st Tier Brands / Sellers
Material Sources Indirect Suppliers Direct Suppliers
{
• Participation in scheme
• Certified to global • Certified to scheme • Certified to scheme
• Strong buyer adherence to
scheme • Document chain of custody • Document chain of custody
internal policy
3 • Subject to independent • Top management support • Top management support
• Top management support
audits • Resources to implement • Resources to implement
• Integrated procurement
• Share data • Subject to audits • Subject to audits
processes
• Share data • Share data
• Resources to implement
Explanation of key The collaborative scheme needs to be a

features of the model trusted, well-governed independent body
that all actors have confidence in, and that
The Collaborative Scheme maintains the relationship at every step in
The core of this model is the independent, the supply chain.
multi-stakeholder Global Collaborative
Scheme, which serves as the umbrella of the The Supply Chain
entire effort. The scheme ideally focuses on The supply chain in the model is intention-
one or related commodities, and the traceabil- ally generic, moving from producers / raw
ity of that commodity in relation to a specific material sources to the brands / sellers of
and limited set of sustainability attributes. finished goods, demonstrating the traceability
responsibility of the actors along the way.
The scheme is responsible for traceability all Each step along the supply chain has spe-
along the supply chain, and has the following cific responsibilities in terms of traceability. It
responsibilities: is important to note that no single step in the
• Provides guidance to ensure the source of supply chain is fully responsible for ensur-
the commodity meets the sustainability ing that steps further up or down the chain
claims; are maintaining the sustainability attributes
• Provides guidance to ensure that the full of the commodity. While businesses can
chain of custody or supply chain meets the influence, and certainly should communicate
sustainability claims; to and hold their direct business partners ac-
• Provides guidance to ensure that the countable, the model recognizes that beyond
processes of the companies involved in the immediate business relationships, suppliers
supply chain are enabling the commodity and buyers usually have limited influence.
to maintain its sustainability attributes; This underlines the importance of the multi-
• Verifies/audits as appropriate to enable stakeholder scheme, as a neutral party that
responsibilities 1-3 or links to a third party is responsible for the assurances across the
auditor and provides certification; whole of the chain and that can exercise
• Stores the relevant data in a secure system leverage with suppliers and producers where
and enables the information to be shared an individual company may have little influ-
within the business partnerships in the ence.
supply chain; While recognizing that all supply chains
• Manages labelling requirements and sus- are different, there are some universal re-
tainability claims attached to products; and sponsibilities that apply across commodities.
• Provides format or source for standardized
data collection.
Part 3
Practical Guide for Companies
to Pursue Traceability
Businesses increasingly pursue traceability • Reducing risk

systems to help them achieve sustainabil- • Operational efficiencies & process
ity goals and support sustainability claims. consistency
But the reasons for instituting a traceability • Securing supply
programme and the criteria for choosing the • Supplier selection and supplier
right one is specific to each company. Busi- relationships
nesses need to ask “Why are we pursuing trace- • Reputational benefits
ability? Is it right for us and our stakeholders?”
This section provides guidance for com- Risks associated with the supply chain can
panies on how to consider and potentially be addressed through traceability systems,
implement traceability. In particular, it looks as traceability allows a closer look into the
at drivers and benefits, the seven steps that supply chain from producers to first tier
a company can take when implementing suppliers. A traceability system that focuses
traceability, options and alternatives to trace- on improving sustainability is a mechanism
ability, and then finishes with some practical for identifying potential problems within the
key lessons, summarizing learnings from supply chain. In industries using minerals,
companies who have significant experience for example, traceability can help mitigate
implementing traceability programmes. the risk of conflict minerals appearing in the
supply chain. Reducing risk ultimately helps
businesses identify and address problematic
1. Drivers and Benefits materials or practices; however, it should be
noted that traceability schemes may uncover
This section outlines key reasons why com- only some areas of risks, depending on the
panies should consider traceability. These specific focus of the scheme, and are not a
drivers are grouped into four main themes: substitute for the broader responsibility to
Values and efficiencies, stakeholder pres- identify potential or actual negative impacts
sure, regulation, and global alignment. For to, for example, human and labour rights
a given company, any combination of these across a company’s supply chain.
drivers may factor into their decision to pur-
sue traceability. Operational efficiencies and process con-
sistencies can be identified and replicated as
Value and efficiencies part of implementing a traceability system.
Businesses stand to gain from implementing Several companies interviewed cited that
a traceability system with sustainability objec- a better understanding of the supply chain
tives in a number of areas including: and its inherent challenges was a primary
Values and Stakeholder Regulation Global Alignment

Efficiencies Pressure
1. Reducing risk 6. Meeting stakeholder 8. Meeting legal 9. Standardization

2. Operational demands for more requirements of expectations,
efficiencies and product information processes and
process consistency 7. Ensuring systems
3. Securing supply sustainability claims 10. Ensuring security of
are true natural resources
4. Supplier selection
and supplier
relationships
5. Reputational benefits
benefit for businesses. A traceability system reputational risks arising from fines, negative
implemented at different stages of the supply legal judgments, boycotts, public protests
chain can reveal processes that are especially and/or negative media attention in response
effective (or on the contrary, that could be to social and environmental harm. Leading
improved). The exchange of data and docu- businesses have been rewarded with positive
mentation related to implementing trace- impacts on external reputation. Moreover,
ability can also open space for dialogue about companies suggested that there are inter-
process improvements. Ultimately, traceabil- nal benefits related to reputation as well.
ity can contribute to spreading best practices Traceability systems have been connected to
throughout supply chain actors to achieve greater employee morale and pride within
operational efficiencies, cost reductions and organizations, representing another driver for
increased productivity. Plus, many of the re- business investment in traceability.
quirements in traceability standards translate
to good business management, which can Stakeholder pressure
bring benefits in terms of product quality, as
well as sustainability. In addition, once risks • Meeting stakeholder demands for more
related to weak spots in the supply chain product information
have been identified it is easier for companies • Verification of sustainability claims
to switch to more credible alternatives or take
action to jointly resolve the identified risks. Companies face stakeholder demands for
product information that ensures that sup-
A secure supply of commodities can be ply chain processes do not include harmful
central to business now and in the future. En- environmental or social practices. News sto-
suring that commodities are sourced in ways ries on issues like conflict minerals, rainforest
that are respectful of the UN Global Compact destruction, or animal welfare are increas-
Ten Principles is a way to invest in the future ingly gaining public attention. Consumers
of the business. Thus, the value of com- represent one group of stakeholders that
modities can sometimes drive the decision to is sensitive to the sustainability records of
implement a traceability system. products they purchase. NGOs and advocacy
organizations also work to raise sustainability
Pursuing traceability can also help a business issues and to elicit more information from
make better decisions in terms of supplier companies about procurement practices.
selection and supplier relationships. For Traceability systems can help businesses re-
new suppliers, businesses can ask questions spond to these demands for information and
about how they are tracing their own supply levels of transparency.
chain, and gauge the benefit that the supplier Companies need to have a means of
could bring to their business. In addition, for verifying sustainability claims linked to
longer-term supplier relationships, engaging their products, and traceability systems can
in traceability creates a new positive dynamic help business follow through on attributes
with the supplier. connected to their products. Traceability in
particular provides a tool to monitor products
Leading businesses gain reputational and materials as they travel through the sup-
benefits through traceability systems that ply chain in order to ensure that responsible
demonstrate a commitment to sustainability social and environmental practices are used
outcomes. The data collection and increased at every step. Verifying the claims they make
understanding of the supply chain can serve about these materials through mechanisms
as the first step to achieving broader sustain- like third-party audits has been an important
ability objectives, increasing competitive issue for stakeholder relations. Traceability
advantage and providing added value for systems can help companies fulfill their sus-
customers. Traceability systems demonstrate tainability promises by providing a means of
resources and technology going toward ad- assuring sustainability and by generating data
dressing risks in the supply chain, such as that can be shared with stakeholders.
Regulation meet legal requirements to operate in that

• Meeting legal requirements area. Guidance from the Organisation for Eco-
Respecting national or international legal nomic Co-operation and Development (OECD)
requirements or guidance directives related also provides best practices for establishing
to sustainability issues is a priority for any a traceability system. In addition, traceabil-
company. Regulation addressing issues like ity can help companies to meet other legal
minerals extracted in conflict zones or threats requirements, such as truth in labeling laws.
of illegal logging require various degrees of It is important to note that companies
due diligence on the part of actors through- have the responsibility to ensure they under-
out the supply chain to achieve compliance. stand the regulation that applies to them,
Companies operating in the European Union and that participation in a global traceability
or the United States and working with high- scheme is not a substitute for due diligence or
risk commodities must implement origin legal compliance.
assurance or traceability systems in order to
Overview of existing traceability related regulation as of March 2014 18
Fish
European Commission Food Contains general food traceability requirements (including for seafood)
Law Regulation 178/2002 such as that food has to traceable through all stages of production,
processing, and distribution. Every food item must have an identifiable
supplier and customer. 19
Minerals
Dodd-Frank Wall Street Requires that US Securities and Exchange Commission (SEC)-registered
Reform and Consumer companies disclose their use of conflict minerals (sourced from the
Protection Act, Section Democratic Republic of the Congo or adjoining countries), effectively
1502 requiring origin information for all products containing minerals. 20
OECD Provides guidance for due diligence for responsible supply chains related
to conflict minerals, including recommending traceability systems. 21
Timber
EU Timber Regulation Prohibits the placing of illegal timber and timber products on the EU inter-
995/2010 nal market and requires “due diligence” and risk management of EU traders
of timber, including obligations to keep records that facilitate traceability.
For example, traders need to keep records of their suppliers and customers
so that operators can always be traced. Furthermore, operators must have
access to information that describes the timber and timber products such
as country of harvest, species, quantity, supplier details and information on
compliance with national legislation.22
US Lacey Act Tackles trade of illegal timber and timber products in the US along the
entire supply chain and requires that importers exercise “due care” in
identifying the source of their goods.23a This includes working with sup-
pliers to ensure that timber is sourced from forests where legal harvest
and chain of custody can be verified, as well as declaring the species,
country of origin and other relevant information important to the wood or
product’s origin.23b
Global Alignment materials where possible. This can be a dif-

• Standardization of approach ficult process, and the information should
across an industry be gathered through direct interaction with
• Ensure security of natural first tier suppliers, conversations with NGO
resources partners who focus on commodities and com-
Standardization of expectations, processes modity organizations, and where relevant,
and systems with regards to traceability of producers and potentially impacted stake-
the sustainability attributes of a commodity is holders. This will help identify which raw
advantageous as it reduces duplicative work materials or commodities carry the highest
and the burden on individual companies, as risks of being involved with adverse impacts.
well as makes sustainability requirements a Some businesses will already know the an-
norm in the industry. The emergence of com- swer to this before even reading this step, but
mon reporting templates and standardized for others, this may take some assessment.
processes has made it simpler and cheaper Either way, challenge conventional wisdom
for companies to respond to traceability de- and look deeply at what is in the company’s
mands. The Conflict Free Smelter Programme, products – the commodities that carry the
for example, was developed in response to highest risks might be a surprise.
industry desire for greater alignment around
conflict minerals and for easy-to-use tools. As 2. Gain a full understanding of all relevant
these points of collaboration develop, compa- sustainability issues to those commodities
nies are more likely to engage in traceability and identify whether traceability is the
for two reasons: common tools make up-take best way to mitigate those risks.
easier, and industry-wide acceptance moti- Once you know the key commodities,
vates companies to participate. familiarize yourself with all sustainability
challenges associated with those commodi-
Beyond the direct business value of raw mate- ties. Again, some of this will likely already be
rials, security of natural resources broadly common knowledge to you or to the category
speaking is crucial for businesses and stake- manager responsible for the commodity, but
holders alike. Companies play an active role there are likely to be surprises to uncover.
in managing land, water, and living resources Relying on external data or talking to trusted
during operations throughout the supply stakeholders to get their perspective would be
chain. Contributing to the conservation of helpful. It is also recommended to take a life-
those resources for the long term can be part cycle approach considering holistically the
of a business’s mandate, and is increasingly sustainability issues for specific commodities
expected by stakeholders. Traceability sys- – i.e. consider not only the risks associated
tems provide a means of monitoring impacts with the production of the raw material itself,
on the environment and can be a tool for but also its processing, use and end-of-life
companies to support the conservation of stage. For example, a company may source
natural resources. “sustainable” bamboo, but if it goes through
the traditional rayon processing, the net
environmental impact may be negative, due
2. The Practicalities of to the harsh chemicals used.
Traceability: Implementation This is also the time to fully take stock
in Seven Steps of what the alternatives to traceability to
achieve your sustainability objectives are,
Following this overview of traceability and its and mitigate salient risks. Get stakeholder
benefits, are the steps businesses can take to input on what they think is the best way to
implement traceability. improve the sustainability attributes of the
said commodity to gain external perspective
1. Identify the key24 commodities on whether traceability is your best course of
Make an effort to map the material supply action. Traceability may be the most effective
chain inputs, looking across all procurement way to address only one set of risks, depend-
categories and tracing products back to raw ing on the specific scope of the scheme, but
not all potential negative impacts. It should

Forest Stewardship Council
be noted that sustainability issues that are
The Forest Stewardship Council was formed
not covered by traceability, whether they
through a collaboration of social, economic and
relate to key or non-key commodities, should
environmental interests including WWF, IKEA
still be addressed separately using the appro-
and B&Q, among others. It gained momentum
priate policies and procedures.
through the United Nations Conference on Envi-
ronment and Development in 1992, which pro-
3. Develop the business
vided a platform for multi-stakeholder support.
case for traceability.
Once you are clear about the commodities
Better Cotton Initiative
that are involved in your business, the most
The Better Cotton Initiative was part of a
material risks associated with these com-
“round table” initiative led by WWF. Early
modities, and have identified that traceability
partners and supporters in the establishment
offers a method for mitigating these risks,
of BCI include adidas, Gap Inc., H&M, the
you should build the business case to pursue
International Cocoa Organization (ICCO), In-
traceability. This is a critical step, especially
ternational Federation of Agricultural Produc-
in convincing senior internal stakeholders
ers (IFAP), International Finance Corporation
that traceability is the best means of address-
(IFC), IKEA, Organic Exchange, Oxfam and
ing sustainability issues that arise from the
PAN UK.
sourcing of the key commodities. Develop an
understanding of your internal appetite and
Roundtable on Sustainable Palm Oil
resources that could be put towards pursuing
The Roundtable on Sustainable Palm Oil began
traceability. Observe what your competitors
as an informal engagement between WWF,
are doing. Determine if there is an existing
Unilever, Aarhus United UK Ltd, Migros, and
traceability scheme for the commodities in
the Malaysian Palm Oil Association, which then
question using this guide as a resource.
formed an Organizing Committee.25
4. Take traceability action.
Once you have identified that traceability is
the right way to mitigate sustainability issues 5. Engage internally with key staff, and
and have developed the business case, you develop solid internal practices and pro-
have two options: cesses.
Adopt an internal policy and approach to
a. If there is an existing traceability support your commitment to traceability
scheme, get involved in the most appro- in the targeted commodities. Be sure this
priate way. Schemes serve as a resource internal policy is reflected in all the relevant
to businesses pursuing traceability and a procurement processes, and that your com-
forum to exchange best practices. There is mitment to traceability is supported by senior
no reason to ‘reinvent the wheel’. Either management.
join the initiative, support the initiative
financially, or simply decide to pursue the 6. Engage with suppliers.
certification for your products. Your requirements are specific to your busi-
b. If there is not an existing scheme for ness, but you will need to communicate to
that commodity, reach out to peers and suppliers so that they understand the benefits
stakeholders (and the UN Global Com- they will gain from traceability. You also need
pact) to encourage or start one. to understand if they can meet the require-
ments, as well as educate them about the
Most existing schemes have been founded traceability scheme and their responsibilities.
through multi-stakeholder engagement. Part- It is important to listen to them and what they
nerships are often formed to overcome the have to say. By connecting and communicat-
absence of a common standard in particular ing early and regularly, you can set up your
commodity groups. company and its supply chain for success.
7. Stay the course.

Traceability can be difficult, it takes time, and 3. Alternatives to Traceability
it can get frustrating when initially it seems
that you will not be able to achieve your As described in the previous section “Drivers
objectives. Stay the course – those who have and Benefits”, traceability is an excellent op-
been at it the longest see pay off after at least tion to achieve key sustainability objectives.
a few years of engagement. At the same time, However, traceability is not the only option
evaluate over time whether the traceability available for companies to achieve sustain-
scheme is successful in mitigating relevant ability objectives, and there are compelling
risks and achieving your sustainability objec- alternatives that should be assessed.
tives. If risks are severe, you will typically In terms of alternatives, companies should
need to see progress more quickly. consider strategies that are most likely to
These steps are a simplification of an have a direct impact, and lead to improved,
iterative and complex process. They should more sustainable practices related to produc-
provide some guidance to all businesses and tion of key commodities.
can be referred to throughout the process. The top five alternatives that have been
identified for this guide are:
1.Direct investment in improvement pro-

grammes and technologies in producer
Quick Reference: countries;
Seven Steps to Traceability 2. D irect supply partnership with producers /
Implementation a group of producers;
3. I mplementation of sustainable agriculture
1. Identify the key commodities. training programmes at producer level;
2. Gain a full understanding of all 4. P artnerships with NGOs who are devel-
relevant sustainability issues to oping sustainable practices in producer
those commodities and identify countries; and
whether traceability is the best 5.Engaging with public policy in producer
way to mitigate those risks. country governments to improve practices
(e.g. enact legislation or improve enforce-
3. Develop the business case for
ment).
traceability.
4. Take traceability action. While this is not an exhaustive list of options,
a) If there is an existing traceability it highlights that the alternatives to traceabil-
scheme, get involved. ity are activities that involve a relatively high
b) If there is not an existing scheme level of engagement or investment. This is
for that commodity, reach out to in contrast to other sustainable supply chain
peers and stakeholders (and the UN activities, such as participating in industry
Global Compact) to encourage or initiatives, creating guidance for suppliers, or
start one. sharing best practice with peers.
5. Engage internally with key staff, and It should be noted that it is not always a
develop solid internal practices and binary choice between traceability and the
processes. activities listed above. As in many cases, com-
panies active in traceability are also engaging
6. Engage with suppliers. in these alternative activities. Often, a com-
7. Stay the course. bination of activities, including traceability,
may be most important to mitigate the dif-
ferent sustainability risks that can be associ-
ated with a commodity. The decision-making The following table outlines the key drivers
process surrounding the implementation of and alternatives to traceability that could
traceability or alternatives is dependent on meet the needs expressed by that driver.
the resources and appetite for engagement
at the individual company level, and what
is most appropriate to mitigate an identified
risk or impact.
Driver How traceability Other options to

addresses this driver address this same driver
Value and efficiencies Provides a process for Investment in internal systems.

the supply chain/sourcing
Consolidation of supply chain where
teams to address risks,
achieve efficiencies, possible.
secure supply, and gain
reputational benefits.
Stakeholder pressure Assures stakeholders that Investment in producer communities.

the product / supply chain Direct training to producer communities.
is meeting sustainability
demands and verifies Transparency around internal sustainability
sustainability claims. efforts.
Regulation Increasing regulation No real alternative where regulation

requires companies to requires companies to know the sources
have direct knowledge of of their materials, but key complementary
raw materials from high- activities are:
risk areas that appear in Engaging with producer countries to
products.
change practices.
Direct investment in improvement
programmes and technologies in producer
countries.
Global alignment Provides assurance of a Engaging with producer countries to

standardized approach change practices.
across an industry
and brings alignment
on natural resource Direct investment in improvement
conservation. programmes and technologies in producer
countries.
4. Keys to Successful nology to support the initiative, resourcing

Implementation: Helpful Advice for scale, or investing in other areas, business
from Peers has a significant role to play.
Traceability is a long-term
The businesses interviewed for this project investment; be prepared to stick
were unanimous in their views that trace- with it over the long-term.
ability has benefited their organizations, and Companies interviewed for this guide did not
at the same time has been challenging to reveal specific financial measures that dem-
undertake. The individuals interviewed were onstrated the ROI on traceability; however,
willing to share their perspectives of par- the perspective of those involved in traceabil-
ticular challenges, expectations and lessons ity for some time was that it does pay off in
learned. The following is a summary of the the long run.
main findings.
Companies also need to devote internal
Focus on those commodities that are most resources to the programme.
material to your business, and areas where Many of the companies interviewed revealed
you have the greatest risk and leverage. that they did have to overcome opposition,
As outlined in our steps above, companies and in some cases demands for a short-
should not feel pressured to participate in term ROI. However, this is a difficult area to
traceability schemes across every commodity calculate financial costs and benefits, and
they buy, but rather focus on those that are traceability is also a long-term investment in
most material to the business based on as- the reputation of the company. It is advisable
sessments of sustainability risks and potential to find ways to protect the programme from
adverse impacts. It can be difficult to gain demands for short-term pay-offs.
internal buy-in for developing a traceability
programme, and it makes it much easier if Strong supplier relationships and good
the business case is clear, which relies largely supplier communication is key to the suc-
on the level of risk and opportunity that a cess of a traceability programme.
company has for leverage. It is a well-accepted fact in all areas of supply
chain sustainability that good relationships
Devote time, effort and and communication with your supply chain
resources to collaboration. is critical to meeting your sustainability
There is no doubt that collaboration is critical objectives.
to the success of traceability. Companies in- A company should set clear expectations
terviewed urge others to take a collaborative about involvement in the traceability pro-
approach. gramme from the outset, and communicate
Companies should be prepared that them regularly through different methods.
collaboration with parties external to their Traceability programmes can be expensive
company can be challenging, with the need for suppliers, so it is worth considering in
to align very different points of view behind a your communication what the expectations
common purpose. are around cost, and providing suggestions
There are also clear opportunities for com- for how suppliers can manage this aspect. It
panies to take leadership in driving traceabil- is also worth considering your own commit-
ity initiatives further towards scaled impact. ments here; if you are asking suppliers to
Traceability schemes are not perfect, and they take on more costs, have a look at your pay-
likely have challenges that companies can ment terms to ensure they are fair.
take an active role in helping to overcome. An example of a good practice in supplier
Whether it is addressing governance issues, engagement and communication on sustain-
improving stakeholder engagement and in- ability issues is providing consistent messag-
volvement, leading the development of tech- ing through a variety of different types of
engagements. Companies should consider
including clear messages about traceability
in their buyers’ regular exchanges with the
suppliers, through supplier portals, through
conferences or regional meetings, and even
through targeted training programmes.
Considerations for Small-and

Medium-Sized Enterprises (SMEs)
This guide has been written with both large and small businesses in
mind, and SMEs can benefit from traceability as much as big businesses.
Traceability is a great strategy for SMEs to pursue for a number of rea-
sons. First, they are less likely to run into the resource constraints that
large companies face in terms of procuring “enough” traceable raw ma-
terials. Committing to only purchase certified, traceable organic cotton
or sustainably sourced palm oil will be an easier commitment to make
for a company that is purchasing a smaller batch of this resource.
In addition, many SMEs are suppliers to large multinational enterprises
(MNEs) that increasingly have more stringent sustainability require-
ments, and are looking for suppliers who can help them achieve these
goals. By committing to engage in recognized traceability schemes,
SMEs demonstrate to customers their commitment to sustainability, and
contribute to the achievement of their customers’ sustainability goals.
The challenges to SMEs are actually not that dissimilar to some of
the key challenges for MNEs, but are potentially amplified due to their
smaller size. Most importantly, the cost of the certified materials is
across the board higher than for non-certified materials, so the business
will need to be able to absorb this cost. Another major consideration is
resources, which may be a challenge for SMEs due to staffing and other
resource constraints.
Conclusion
and Outlook for the Future
It is hoped that readers have enjoyed and Outlook for the Future
gained value from the guide, and will be tak-
The overwhelming consensus from the
ing appropriate steps to engage with trace-
individuals interviewed for this guide is that
ability in their companies and organizations.
traceability is here to stay, and will continue
The stated objectives of the guide were to:
to increase in importance and impact.
One of the most critical drivers of this
• Provide an overview of the importance of trend is increased consumer demand to know
traceability for sustainability purposes; more about the products they are buying –
• Highlight the global opportunities and what is in them, where they come from, the
challenges of traceability; and conditions under which they were made,
• Outline practical steps of how to go about how they got to them, and even how they
implementing traceability. will be disposed of. Companies who invest in
increased transparency, traceability and mea-
Global collaboration, driven by multi-stake- surements of sustainability data along the
holder collaborative schemes, is the key to value chain will have a competitive advan-
success in traceability. As our best practice tage in meeting this consumer demand.
model demonstrates, the most effective way It is possible to see a future where tech-
forward for traceability is through the global nology enables the full product and supply
support of independent, multi-stakeholder chain information that consumers expect,
collaborative schemes to govern traceability and traceability will be the norm. Tools
by commodity. Companies, governments, already exist to enable people to use their
NGOs and stakeholders must work together smart phones to scan a barcode and learn
towards this goal. more about a product from a sustainability
Companies that attempt traceability on perspective; it is easy to see this trend evolv-
their own will face immense hurdles and may ing as technology improves, and as the ability
actually impede the work being done on an to collect, analyze and share data becomes
industry level. This does not mean that com- easier and cheaper.
panies must be willing to embrace and sup-
port collaborative initiatives, while mindful
of their imperfections. However, the benefits
outweigh the negatives: by getting involved Any additional input is welcome; please con-
in a global initiative, companies have a tact the UN Global Compact and BSR if you
chance to shape and drive the initiative, and have feedback you would like to share to im-
have the support of their peers and a trusted prove our work, or if you have questions for
stakeholder as they develop their own related the writers of the guide or the organizations
approaches. that were interviewed for the guide. Only by
working together around the world can we
truly collaborate to drive more sustainable
supply chains.
Annex
Traceability by Commodity: Gaps and
opportunities for collaboration
What are current gaps or opportunities for

Building on the landscape of different col-
collaboration on commodity traceability
laborative schemes by commodity, this annex
systems?
offers guidance about which initiatives cur-
rently have the most momentum and points GRSB is a multi-stakeholder global forum
to areas of potential collaboration and align- that addresses sustainability issues in the beef
ment for 10 commodities. supply chain. The initiative is in the stage of
It is important to note that this list does best practice sharing and organizes confer-
not represent a comprehensive record of all ences for its growing membership. Scattered
existing commodities, but includes only those national traceability schemes are in place, yet
that are widely associated with traceability more alignment of standards and a focus on
for sustainability purposes. It is worth con- social, environmental and economic impact
sidering that many other commodities could as promoted by GRSB would drive the sus-
benefit from a traceability approach. tainability agenda.
Beef Biofuel
What are some of the key sustainability What are some of the key sustainability
issues relevant to this commodity? issues relevant to this commodity?
• Preventing deforestation: Working to en- • Social Impact: Working to protect human
sure a sustainable livestock creation with- and labour rights throughout the supply
out further deforestation of the Amazon chain and respect prevailing land rights.
Biome due to cattle ranching. • Economic impact: Working to preserve
• Protecting land rights for indigenous the functioning of local economies and to
peoples: Working to prevent invasion of include small-scale producers.
protected areas for cattle ranching. • Environmental impact: Manage impacts of
• Promoting animal welfare: To prevent new feedstock farming for natural habi-
animal mistreatment at farms and during tats and ecological balance. Working to
transport to slaughter. guarantee local food security and prevent
deforestation.29
Who are some relevant actors?
• The Global Roundtable for Sustainable Who are some relevant actors?
Beef 26 (GRSB) is a multi-stakeholder initia- • Roundtable on Sustainable Biomaterials30
tive with the aim to develop a sustainable (RSB) - The RSB sustainability standard
global beef value chain. represents a multi-stakeholder initiative of
• The Tropical Forest Alliance 202027. over 100 organizations including farmers,
• Several national advanced traceability refiners, regulators and NGOs. RSB uses
schemes. several “chain of custody” options, such as
• NGOs: World Wildlife Fund28, Rainforest 100 per cent segregation and Mass Balance
Alliance. to meet producers’ needs.
• Active organizations: McDonalds and
Walmart are supporting the initiative.
›› First certificate issued in 2012, today Cocoa

RSB issues around 10 certificates.
• International Sustainability & Carbon Certi- What are some of the key sustainability
fication (ISCC) EU Certification31. issues relevant to this commodity?
›› Complies with the European Renewable • Establishing labour rights: Working to en-
Energy Directive (EU RED). force labour rights in terms of working con-
›› Certifications issued mostly for Ger- ditions of children, women and migrants.
man and European companies, but also • Protecting human rights: Following the
recognized internationally. rule of law and respecting land tenure,
• Bonsucro32 Certification System (sugarcane children’s rights, cultural and religious
and ethanol). rights and advocating for gender equality.
›› Thirty-one production certificates have • Enable empowerment: Working to facili-
been issued as of the date of this publi- tate farmer organization, access to finance
cation and 106 companies and organiza- and credit; prevent social exclusion and
tions are members of Bonsucro. marginalization, gender equality to estab-
• BIO-EN-AREA33 project tries to develop a lish resilient and sustainable livelihoods.34
Biomass and solid biofuels certification and
traceability control system (BIOPATH). Who are some relevant actors?
• NGOs: Sustainable Agriculture Network34, • UTZ Certified37 using Mass Balance and Seg-
Forest Stewardship Council35. regation – Their membership comprises
• Active organizations: BP, Shell, World 300,000 cocoa farmers from 14 countries.
Wildlife Fund, Ethical-Sugar, the Coca-Cola UTZ certified cocoa products are sold in
Company and Kraft. more than 50 countries and supply has in-
creased by 150 per cent from 2012 to 2013.
What are current gaps or opportunities for Twenty-two per cent of cocoa produced
collaboration on commodity traceability globally is certified sustainable, of which
systems? more than half is UTZ certified.
RSB has issued 10 certificates for sustain- • CEN/TC 415 Project Committee on Sustain-
able biofuel certification to date. ISCC has able and Traceable Cocoa of the European
been especially recognized by the European Committee for Standardization (CEN) initi-
Commission. However, more robust certifica- ated its work on traceability standardiza-
tion schemes, especially towards traceability, tion in 2012 and aims to publish a com-
could provide a more integrated approach bined ISO/CEN Standard in 2015.38
towards sustainability and help to gain mo- • Fair Trade Labelling Organization Inter-
mentum. Current schemes are furthermore national39 (FLO) certified more than 827
targeted towards large-scale production and producer organizations. The product certi-
exclude small-scale farmers. fication is carried out by FLO-CERT which
is ISO 65 certified. The ISO 65 certification
guarantees that quality management is in • Labour and children rights: Working to

place and transparency is secured. prevent child labour and implement fair
• Other organizations that promote sustain- working conditions.
able cocoa supply chains: IDH Sustainable
Trade Initiative40, International Cocoa Who are some relevant actors?
Initiative41, International Cocoa Organiza- • Better Cotton Initiative51 (BCI):
tion42, World Cocoa Foundation43, Rain ›› Better Cotton Fast Track Programme
Forest Alliance44, Cocoa Connect45, Har- (BCFTP) to speed up sustainable cotton
kin–Engel Protocol (Child labour)46. production.
• Other NGOs: Source Trust47 in Nigeria, Soli- ›› Two Chain of Custody mechanisms are
daridad48 and Oxfam Novib49. used and can be tracked via an online
• Active organizations: Fazer, Ahold, Cargill, tracking system for BCI members. From
Heinz Benelux, Mars, Nestlé and ECOM. the farm to the gin, BCI uses physical
segregation and after that Administra-
What are current gaps or opportunities for tive Mass-Balance.
collaboration on commodity traceability ›› Objectives: demonstrate the business
systems? case of sustainable cotton, increase sup-
The UN International Cocoa Agreement50 gave ply chain traceability and enable joint
momentum to the formulation of standards initiatives and best practice sharing.
and certification scheme in the cocoa sector • Sustainable Trade Initiative52 - IDH supports
in 2012. Currently-used certification schemes BCI and awareness raising.
comprise the UTZ certification and the Fair • Textile Exchange Organic Content Stan-
Trade Label. However in 2012 the CEN/ISO dard, Global Organic Textile Standard
working group on Sustainable and Traceable ›› In place for more than 10 years.
Cocoa initiated work and will add on to the ›› More than 3,000 units certified to robust
available standards. While a lot of initiatives traceability standards.
and standard-issuing work is under way, • NGOs: Fair Trade Labelling Organization
more alignment is needed in order to find International (FLO).
a common and transparent scheme for all • Active organizations: IKEA, H&M, M&S, Nike,
involved stakeholders. Patagonia, Adidas, and Levi Strauss & Co.
What are current gaps or opportunities for

Cotton collaboration on commodity traceability
systems?
What are some of the key sustainability As cotton is one of the most polluting com-
issues relevant to this commodity? modities where 10 per cent of all chemicals
• Environmental impact: Working to reduce used in agriculture are processed worldwide,
chemicals and water used in the cotton the demand for fair trade and organic cot-
industry and improve carbon footprint. ton has grown. However, the organic cotton
• Social impact: Protecting workers and market is still relatively small and initiatives
small farmers and providing them with fair need to gain momentum in order to improve
compensation. sustainability for mass production. So far an
online traceability scheme is available for BCI Fish

members only. However, BCI projects that
by 2020 the initiative will be recognized as What are some of the key sustainability
a mainstream sustainable commodity and issues relevant to this commodity?
comprise around 30 per cent of global cotton • Preventing overfishing: Working to ensure
production. In addition, the Organic Content global fisheries maintain sufficient stock
Standard (OCS) and the Global Organic Textile over time.
Standard (GOTS) each have had big impacts • Environmental impact: Reducing effects of
with more than 3,000 units certified globally aquaculture farms and wild-capture fisher-
and a robust process due to the use of trans- ies on the environment.
action certificates. Hence, the initiative needs • Reducing instances of illegal fishing: For
to gain momentum and provide standards wild-catch fish, instances of IUU (illegal,
applicable to the mass market and share best unreported, and unregulated) fishing are
practice in order to allow for traceability.53 a concern and can be connected to poor
environmental and/or labor practices.
Who are some relevant actors?

• The Marine Stewardship Council55 (MSC)
H&M sets and maintains standards for wild-cap-
More cotton is used by H&M than any ture fisheries. MSC includes the MSC Chain
other raw material. Considering the of Custody Standard for Seafood Trace-
high volume of cotton used and the ability that requires traceability by batch
understanding of the huge impacts of from raw material input to final consumer.
cotton production, H&M has commit- • The standard uses traceability to provide
ted to sourcing all cotton from more assurance that the products with an MSC
sustainable sources by 2020. Better ecolabel originated from a certified fish-
Cotton, organic and recycled cotton are ery. The Chain of Custody standard also
key to achieving this target. The com- requires segregation of certified products
mitment to better raw material sources from non-certified products at all steps of
plays out in their requests to suppli- the supply chain. Compliance is checked by
ers, as H&M is not directly involved in independent auditors using a traceability
the purchase of raw materials. H&M test and Mass Balance. The MSC’s Environ-
refers to their preferred materials as mental Standard for Sustainable Fishing
“conscious” materials; these include is the standard against which fisheries are
organic, recycled, and Lenzing Tencel. certified as sustainable, based on maintain-
H&M has committed to never using ing a sustainable fishing level, minimizing
a “conscious” material if there is no environmental impact and meeting local
certification in place. BCI is also part regulation.
of their strategy to transition to more ›› Currently 8 per cent of wild caught fish are
sustainable cotton. Standards that MSC certified. Fifty per cent of the top 25 US
cover the chain of custody from the seafood retailers have commitments with MSC.
raw material to the final product allow • The Aquaculture Stewardship Council56
H&M to verify the content of products (ASC) sets and maintains standards for
even when other information is not yet farmed seafood. ASC works with MSC for its
known. To assist the transition from Chain of Custody Standard, and additional
trial to implementation phase, H&M requirements relevant to farmed fish have
invests in farmer training under the
BCI system.54 H&M would like to see
traceability schemes including BCI
develop in scale, and recognizes a need
for better technology to support them.
been added to an annex of the MSC Chain Leather

of Custody Standard.
• UN Food and Agriculture Organization57 What are some of the key sustainability
(FAO) has best practices guidelines for eco- issues relevant to this commodity?
labelling of fishery products developed dur- • Preventing deforestation: Working to en-
ing a multi-stakeholder process, including sure a sustainable livestock creation with-
Guidelines for Responsible Fishing and Guidelines out further deforestation of the Amazon
for Marine Eco-Labelling Programme. Biome due to cattle ranching.
• ISEAL Alliance58 developed three Codes of • Protecting land rights for indigenous
Good Practice that its members, includ- peoples: Working to prevent invasion of
ing MSC, need to comply with. Its most protected areas for cattle ranching.
relevant codes of good practices are the • Slave labour concerns: Child labour in
Standard-Setting Code: Setting Social and Envi- connection with hides and skins and forced
ronmental Standard v5.0 and the Assurance work at farms.
Code: Assuring Compliance and Environmental • Promoting animal welfare: To prevent
• ISO 12875: 201159 Traceability for finfish animal mistreatment at farms and during
products (food safety, quality, and label- transport to slaughter.
ling).
• Interested Organizations: Monterey Bay Who are the relevant actors?
Aquarium Seafood WATCH, Audobon • The Leather Working Group (LWG)60 is a
Society, Blue Ocean Institute, and Marine multi-stakeholder group that has developed
Conservation Society. and maintains a protocol to assess envi-
ronmental performance compliance for
What are current gaps or opportunities for tanners. The Leather Working Group Envi-
collaboration on commodity traceability ronmental Stewardship Protocol includes
systems? a Guidance Note for Hide Traceability that
MSC’s Chain of Custody and ecolabel are helps leather manufacturers to have a clear
recognized as a robust traceability scheme; understanding of the supply chain up to
by incorporating the ASC’s guidelines in raw materials.
the annex, the standard covers both wild- ›› The LWG audits 10 per cent of the global
catch and farmed seafood. The standard also leather production, and 20 per cent of the
meets ISEAL Alliance and FAO best practice footwear leather supply chain.
guidelines, and serves as a widely utilized ›› The LGW has currently 140 member compa-
traceability scheme in the seafood industry. nies from 21 countries.
Greater alignment around the MSC Chain • Euroleather61 (initiated by COTANCE and
of Custody standard could strengthen it and European Trade Union) supported by Mem-
offer credible assurance for sustainability ber States (Germany, Greece, Spain, France,
claims. Italy, Netherlands, Portugal, Sweden, Unit-
ed Kingdom, Lithuania, Bulgaria, Roma-
nia and Poland) looked into political and
technical issues of traceability/transparency
systems. The project established a database
that rates currently available traceability
methods in regards to applicability and
costs with access for members only. The
European veterinary/sanitary certificates on rights, prevent forced work and maximize

hides and skins and animal welfare could community empowerment.
be used as the basis for a guarantee system • Environmental impact: Reduce the use of
of good practice. water and the impact on biodiversity.
• Others: EMAS – The European Eco-Man-
agement and Audit Scheme, IVN Natural Who are some relevant actors?
Leather Standard in cooperation with IMO62 • Conflict-Free Sourcing Initiative63 (CFSI):
(Institute for Market Ecology), ISO 14000 ›› Founded in 2008 by members of the Elec-
/ ISO 14001 Environmental Management tronic Industry Citizenship Coalition and
Standard, CITES (Convention on Interna- the Global e-Sustainability Initiative.
tional Trade in Endangered Species of Wild ›› Conflict Free Smelter Program (CFS) is an
Flora and Fauna), PETA, and Greenpeace. audit tool with a compliance protocol
to identify conflict-free smelters and
What are current gaps or opportunities for refiners.
collaboration on commodity traceability ›› Membership of over 160 participating
systems? companies.
The LWG represents a current leading collab- ›› Provides due diligence tools, such as the
orative initiative on traceability in the leather Conflict-Minerals Reporting Template
supply chain. On its website, LWG provides (CMRT), that standardizes supply-chain
guidance notes for slaughterhouses, suppli- due diligence inquires.
ers of splits and raw material suppliers. The • Responsible Jewelry Council64 (RJC)
LWG benchmarking functions as an incentive ›› The RJC is a not-for-profit, standard set-
system for tanners. Only manufacturers that ting and certification organization with
submit their benchmarking data are promot- more than 450 member companies.
ed and rated as an LWG supplier. However, ›› The Code of Practice addresses human
the traceability guidance note is relatively rights, labour rights, environmental
new and the connection with the environ- impact, mining practices and product
mental audit protocol is weak. Strengthening disclosure.
the current scheme could help the leather ›› The Chain-of-Custody standard ap-
industry more effectively address sustain- plies from mine to retail, and includes
ability issues and bring more leather supply requirements for conflict-sensitive sourc-
chain actors to the table. Alignment is under ing for gold refiners.
way, for instance a certification following ISO ›› RJC provides training, guidance, due
14000 or EMAS, and would be beneficial for diligence tools and audit protocols for
the LWG auditing process. accredited third party auditors.
• Kimberley Process Certification Scheme65
(KPCS)
Minerals / Diamonds • The KP has 54 participants, representing 81
countries and account for approximately
What are some of the key sustainability 99.8 per cent of the global production of
issues relevant to this commodity? diamonds.
• Non-conflict diamonds and human rights: ›› World Diamond Council created a Sys-
Working to ensure that diamonds pur- tem of Warranties.
chased are not financing violence in certain • Diamond Development Initiative Interna-
areas of Africa. tional66 (DDI)
• Social impact: Working to protect labour
›› DDI’s ethical diamond certification proj- What are current gaps or opportunities for
ect promotes sustainable sourcing. collaboration on commodity traceability
›› DDI’s Development Diamonds Standards systems?
(DDS) certification scheme intents to im- There is harmonization under way, however,
prove conditions for small scale miners there is still a wide offer of different trace-
(15 per cent of total gem diamond sup- ability schemes . For instance, the Kimberley
ply) who are left out of other schemes. Process in cooperation with the Diamond
• Jeweltree Certification67 Development Initiative International is trying
›› Independent ISO based certification to capture the broad spectrum of suppliers.
scheme for artisanal miners. Hence, a robust and integrated certification
›› Certifies against supply chain transpar- process led through multi-stakeholder initia-
ency for well operated third party veri- tives could help enhance traceability and ad-
fied mining sites and polishing factories. dress the complexity of actors in the mineral
• ICGLR Regional Certification Mechanism supply chain.
for Conflict Minerals68
›› Multi-stakeholder regional certification
scheme involving 11 member states
from the Great Lakes Region of Africa
focusing on the “3 T’s” (tungsten, tanta-
The Mosaic Company
lum, tin) and gold. The Mosaic Company refers to the
›› Comprised of six tools. Includes a track- increasing demand for responsibly
ing and certification scheme, harmo- sourced products from both their
nization of mining legislation among customers and investors, as one of
member states, creation of a mineral the main drivers for their traceability
database, formalization of artisanal and activities. In addition, they have initiated
small-scale mining, a whistleblowing an open dialog with NGOs and other
system, and promotion of EITI. stakeholders, particularly in relation
• Business for Peace69 to the legitimate sourcing of minerals
›› Multistakeholder platform launched by purchased in Africa. Mosaic under-
UN Secretary General Ban Ki-moon to stands the importance of transparancy
deepen and expand private sector action and accountability in developing and
for peace in the workplace, marketplace, maintaining customer relationships. To
and in local communities. remain a profitable going concern, they
›› Working with the Office of the Special have taken steps to ensure that they
Envoy to the Great Lakes Region, Mary remain a reputable and trustworthy
Robinson, to enhance the private sector supplier within the industry. In recent
role in support of the Peace, Security, years, this involved divesting of an unin-
and Cooperation Framework. This tended supplier in the disputed territory
project has an emphasis on sectors with of Western Sahara. While the „clean up“
supply-chains in conflict-affected areas took a great deal of time and resources,
like energy, mining, agroindustry, and it was essential to ensuring that the
information and communication tech- company’s supply chain remained free
nologies. from conflict minerals, and their reputa-
• Other: OECD Due Diligence Guidance, tion intact.
Dodd Frank Act – Conflict Minerals, Gold
refiner audit cross-recognition, Artisanal
and Small-Scale Mining, and Recognized
Responsible Mining Standards.
Palm Oil • Other: Sustainable Palm Oil Platform73,
Belgian Alliance for Sustainable Palm
What are some of the key sustainability Oil74, SAY NO TO PALM OIL75, Sustainable
issues relevant to this commodity? Agriculture Network(SAN)76, Roundtable
• Deforestation of rain forests: Working on Sustainable Biomaterials77 (RSB), Global
to ensure a sustainable farming without GAP78, Fairtrade International79, Organic
further deforestation of rain forests, which Trade Association (OTA)80, and The Tropical
also adversely affects climate change. Forest Alliance 202081.
• Destruction of habitat of flora and fauna: • New initiatives: Indonesian Sustainable
Manage impacts of farming for natural Palm Oil82 (ISPO) standard.
habitats and biodiversity. • Active organizations: Unilever set a target
• Climate change: Prevent greenhouse gas to source all its palm oil from certified,
emissions due to deforestation and water traceable sources by 2020.
pollution through palm oil plantations.
• Social impact: Working to respect land What are current gaps or opportunities for
rights of indigenous people and provide a collaboration on commodity traceability
fair source of income to small-scale farmers. systems?
RSPO is a widely-used certification scheme
Who are some relevant actors? for palm oil used in food and oleo-chemicals,
• Roundtable on Sustainable Palm Oil70 whereas the ISCC is utilized more frequently
(RSPO) - RSPO is a global certification for palm-oil certification for biofuels. Today,
scheme formed in 2004 to set the standard 14 per cent of palm oil globally is certified
for “sustainable palm oil”. by the RSPO, which provides an electronic
›› Combined RSPO issued around 300 system to enable the traceability of palm oil.
certificates in the categories of grower Another player in palm oil certification is
certification, supply chain certification GreenPalm. GreenPalm provides a trading
and trademark licenses. system for RSPO’s certificates. Despite this
›› Supply chain model: collaboration, the RSPO’s etrace system works
• Physical trading system via Mass Balance. only for RSPO data. The Palm Oil Platform
• Segregated and Identity Preserved through provides a good picture of the current devel-
the online platform eTrace that covers the opment of the palm oil traceability scheme
physical trading of Certified Sustainable and available certifications. Further integra-
Palm Oil (CSPO). tion of both systems could strengthen the
• Trading of green certificates through Green- scheme and allow companies to keep track of
Palm. their palm oil with one single tool. This could
• GreenPalm71 lead to increased practicability of palm oil
›› Uses Book and Claim. traceability.
›› Endorsed broker by RSPO to trade in
sustainable palm oil.
• The International Sustainability and Car-
bon Certification scheme72 (ISCC) is one of
the main certification schemes for palm oil
used as a feedstock for biofuels.
Sugar What are current gaps or opportunities for
collaboration on commodity traceability
What are some of the key sustainability systems?
issues relevant to this commodity? The traceability of sugar is still in its initial
• Working conditions: Enable compliance stages and Bonsucro is the first global metric
with legal standards, labour and human standard in the sector that tries to enforce
rights to prevent child work and improve standards. The assessment shows that more
working conditions. initiatives and working groups are needed in
• Environmental impact: Manage impacts of order to develop and enable proper enforce-
new feedstock farming for natural habitats ment of standards and tractability schemes.
and ecological balance. Working to guaran-
tee local food security.83
Who are the relevant actors? Timber

• Bonsucro Certification System84 is divided
into Bonsucro Production Standard certify- What are some of the key sustainability
ing mills and Bonsucro Chain of Custody issues relevant to this commodity?
Standard targeting any supply chain actor. • Climate change: Working to protect water
›› It was started by the Better Sugarcane quality and monitor CO2 emissions.
Initiative, and has provided certifica- • Deforestation of rain forests: Prevent
tions since 2011. Thirty-one production illegally harvested timber and promote sus-
certificates have been issued so far and tainable harvest levels and prompt regen-
106 companies and organizations are eration (e.g. replanting and reforestation).
members of Bonsucro. • Destruction of habitat of flora and fauna:
›› The supply chain coverage covers Bio- Protection of biodiversity and preservation
fuel feedstock production and primary of species at risk and wildlife habitat.
processing. • Land rights: Working to respect land rights
• Better Sugarcane Initiative85 of indigenous people and prevent conflicts
›› Multi-stakeholder initiative of the World over land ownership.
Wildlife Fund, comprising sugarcane
retailers, investors, traders, producers Who are the relevant actors?
and NGOs. • Forest Stewardship Council88 (FSC) was
• ISCC EU Certification86 (sugar as component created in 1993 and uses a segregation
of biofuels) approach (FSC pure products) and Mass
›› Complies with the European Renewable Balance approach (FSC mixed volume
Energy Directive (EU RED) products).
›› Certifications issued mostly for Ger- ›› FSC developed the FSC chain of custody
man and European companies, but also system and introduced an online timber
recognized internationally. traceability platform in order to im-
• Fair Trade Labelling Organization Interna- prove communication between certified
tional87 (FLO) companies.
›› Certified more than 827 producer orga- ›› FSC has issued 27,367 CoC certificates
nizations. and 1,256 FM/CoC certificates.
›› Carried out by FLO-CERT, which is ISO • Programme for the Endorsement of Forest
65 certified. The ISO 65 certification Certification89 (PEFC) Chain of Custody cer-
guarantees that quality management is tification is in compliance with EU Timber
in place and transparency is secured. Regulation (EUTR) requirements.
• EU Timber Regulation90 (EUTR) requires a certification programmes address certain
due diligence and no voluntary chain of types of forests. The two largest international
custody as an automatic proof of compli- forest certification programmes are FSC and
ance. PEFC. PEFC is the largest framework in terms
›› Timber accompanied by a FLEGT (For- of forest area covered and FSC has the highest
est Law Enforcement, Governance and growth rates partly due to its online platform.
Trade) or CITES (Convention on Inter- The UN reports in its annual review of “For-
national Trade in Endangered Species) est Products” that the total number of PEFC
license is accepted by the EU. and FSC chain of custody certificates issued
• Other: Sustainable Forest Initiative91 (SFI), increased from May 2012 to May 2013 by 11.8
Tropical Forest Alliance 202092, eAmerican per cent, which equals some 3,766 more cer-
Tree Farm System93 (ATFS), the Canadian tificates. The global area of certified forest has
Standards Association’s Sustainable Forest for the first time topped the 10 per cent mark
Management Standard94. in proportion to the total forest area.95
• Active companies: Tetra Pak. The efficiency of the schemes could be
enhanced through more alignment between
What are current gaps or opportunities for governmental and voluntary standards as the
collaboration on commodity traceability EU Timber Regulation shows. For example,
systems? green public procurement in the UK and the
The traceability scheme for timber is quite Netherlands has started to recognize FSC and
extensive and today more than 50 different PEFC endorsed programmes.
IKEA
IKEA recognizes wood as the most important raw material to its business and a pre-
cious natural resource. Wood makes up around 60 per cent of all materials used in
IKEA products, making it a critical commodity both for sustainability goals and for
the core business. Incorporating Forest Stewardship Council’s (FSC) Chain of Custody
Standard and Certified Forests has been a means of supporting well-managed forests.
The standard ensures that wood is procured from certified forests, which means that
forest management practices meet social, economic, and environmental conditions.
Incorporating FSC into their procurement practices has helped IKEA invest in the long-
term viability of wood as a raw material, and move toward their goal to become forest
positive by 2020, promoting the adoption of more sustainable forestry methods across
the industry and contributing to ending deforestation.
END NOTE
22. European Commission, Timber Regulation, http://ec.europa.eu/

1. Praxiom Research Group Limited (2013), ISO Definition Traceabil-
environment/forests/timber_regulation.htm.
ity, http://www.praxiom.com/iso-definition.htm#Traceability.
23a. Rainforest Alliance, Verification and Validation, The Lacey Act
2. Praxiom Research Group Limited (2013), ISO Definition Traceabil-
Amendment: What Does it Mean to Your Business?, http://www.
ity, http://www.praxiom.com/iso-definition.htm#Traceability.
rainforest-alliance.org/forestry/verification/lacey-act.
3. Asian Development Bank Institute (2009), The Evolution of Trace-
23b. Environmental Investigation Agency, U.S. Lacey Act, http://eia-
ability Systems, http://www.adbi.org/working-paper/2009/05/28/3012.
global.org/lacey/
ict.food.traceability.system/the.evolution.of.traceability.systems/.
24. In assessing what commodities are “key” and material, best prac-
4. European Commission (2005), General Food Law – Implementa- tice would be to identify which commodities, or processes associated
tion Guidelines, http://ec.europa.eu/food/food/foodlaw/guidance/ with these commodities, entail the highest risks of adverse impacts
index_en.htm on the environment, human and labour rights, rather than what is
of key/importance to the business. It should also not be assumed that
5. Office of the High Commissioner for Human Rights (2011), Guiding
the “key” commodities are those with the highest volume – it could
Principles on Business and Human Rights: Implementing the United also be, for example, a raw material that makes up a small part of a
Nations “Protect, Respect and Remedy” Framework, http://www.ohchr. product, but that are rare or for which no suitable alternatives exists
org/Documents/Publications/GuidingPrinciplesBusinessHR_EN.pdf and that entails potentially severe risks of adverse impacts.
6. United Nations Economic Commission for Europe, Forest Products: 25. Roundtable on Sustainable Palm Oil, Factsheet, http://www.rspo.
Annual Market Review 2012-2013, http://www.unece.org/fileadmin/ org/file/RSPOFACTSHEETFINALRT91.pdf.
DAM/timber/publications/FPAMR2013.pdf.
26. Global Roundtable for Sustainable Beef. Homepage, http://grsbeef.
7. Marine Stewardship Council (2014), MSC in Numbers, http://www. org/.
msc.org/business-support/key-facts-about-msc/?searchterm=numbers.
27. Tropical Forest Alliance. Homepage, http://www.tfa2020.com.
8. Better Cotton Initiative, BCI Story, http://bettercotton.org/about-bci/
28. World Wildlife Fund. Homepage, http://worldwildlife.org.
bci-story/.
29. Food and Agriculture Organization (2013), ‘Biofuels and the
9. UTZ Certified (2014), Press release: UTZ certified farms show higher
Sustainability Challenge: A Global Assessment of Sustainability Issues,
yields and better crops, https://www.utzcertified.org/attachments/
Trends and Policies for Biofuels and Related Feedstocks’, http://www.
article/26582896/Press%20Release_Impact%20Report.pdf.
fao.org/docrep/017/i3126e/i3126e.pdf.
10. ISEAL Alliance (2014), Certification can be proof of sustainability
30. Roundtable on Sustainable Biomaterials. Homepage Member
under new EU public procurement rules, ISEAL Alliance blog, Norma
Overview, http://rsb.org/about/organization/rsb-members/.
Tregurtha, http://www.isealalliance.org/online-community/news/
certification-can-be-proof-of-sustainability-under-new-eu-public- 31. International Sustainability and Carbon Certification. Homepage,
procurement-rules. http://www.iscc-system.org/.
11. Rainforest Alliance, Why Promote Sustainability?, http://www. 32. Bonsurco. General FAQs. Homepage, http://bonsucro.com/site/
rainforest-alliance.org/marketing/why. about/general-faqs/.
12. Fairtrade See Part 2), Section 3 “Best Practice on Traceability”. 33. Bioenarea. Homepage, http://www.bioenarea.eu.
13. Fairtrade (2011), Windward Island Farmers’ Association, http:// 34. Sustainable Agriculture Network. Homepage, http://sanstandards.
www.fairtrade.org.uk/producers/bananas/winfa_2/default.aspx. org/sitio/.
14. UTZ Certified offers mass balance and segregation to supply chain 35. Forest Stewardship Council. Homepage, https://us.fsc.org.
actors involved in the cocoa production. UTZ Certified, Cocoa, https://
36. Cocoa Initiative (2013). Homepage, http://www.cocoainitiative.org/
www.utzcertified.org/products/cocoa?lang=en.
en/reports/policy-updates/105-icis-participation-in-the-third-meeting-
15. 15 Book and Claim, Trade Certificates Support the Environment, of-the-european-committee-for-standardization-cen-.
http://www.bookandclaim.co.uk/.
37. UTZ Certified (2014). Products: Cocoa, https://www.utzcertified.org/
16. US EPA (2014), Renewable Energy Certificates (RECs), http://www. en/products/cocoa.
epa.gov/greenpower/gpmarket/rec.htm.17. This list does not represent
38. Fazer (2014), Cocoa School: Traceability, http://www.fazer.com/
a comprehensive record of all existing global regulation on supply
cocoaschool/traceability.
chain traceability.
39. Fairtrade International (2011), http://www.fairtrade.net/.
17. This list does not represent a comprehensive record of all existing
traceability schemes. The inclusion of a traceability scheme in this list 40. IDH Sustainable Trade Initiative. Homepage, http://www.idhsus-
does not constitute an endorsement of the individual organization by tainabletrade.com.
the UN Global Compact and BSR. 41. International Cocoa Initiative. Homepage, http://www.cocoainitia-
18. This list does not represent a comprehensive record of all existing tive.org.
global regulation on supply chain traceability. 42. International Cocoa Organisation. Homepage, http://www.icco.org.
19. Seafish (2013), Fish traceability requirements, http://www.seafish. 43. World Cocoa Foundation. Homepage, http://worldcocoafounda-
org/industry-support/legislation/traceability-and-labelling/fish-trace- tion.org.
ability-requirements.
44. Rain Forest Alliance. Homepage, http://www.rainforest-alliance.
20. U.S. Securities and Exchange Commission, Dodd-Frank Wall Street org.
Reform and Consumer Protection: Frequently Asked Questions, http://
www.sec.gov/divisions/corpfin/guidance/conflictminerals-faq.htm. 45. Cocoa Connect. Homepage, http://www.cocoaconnect.org.
21. OECD (2013), OECD Due Diligence Guidance for Responsible Sup- 46. Responsible Cocoa: The Harken-Engel Protocol, http://responsible-
ply Chains of Minerals from Conflict-Affected and High-Risk Areas: cocoa.com/about-us/the-harkin-engel-protocol/.
Second Edition, OECD Publishing, http://www.oecd.org/daf/inv/mne/ 47. Source Trust. Homepage, http://www.sourcetrust.org.
GuidanceEdition2.pdf.
48. Solidaridad. Homepage, http://solidaridadnetwork.org. 81. Tropical Forest Alliance 2020. Homepage, http://www.tfa2020.com.
49. Oxfam Novib. Homepage, http://www.oxfamnovib.nl. 82. Indonesian Sustainable Palm Oil. Homepage, http://www.ispo-org.
or.id.
50. UN (2010). International Cocoa Agreement,
https://treaties.un.org/Pages/ViewDetails.aspx?src=TREATY&mtdsg_ 83. Food and Agriculture Organization (2013), Biofuels and the
no=XIX-47&chapter=19&lang=en. Sustainability Challenge: A Global Assessment of Sustainability Issues,
Trends and Policies for Biofuels and Related Feedstocks, http://www.
51. Better Cotton Initiative. Homepage, http://bettercotton.org/.
fao.org/docrep/017/i3126e/i3126e.pdf.
52. IDH: The Sustainable Trade Initiative, http://www.idhsustainable-
84. Bonsurco. General FAQs. Homepage, http://bonsucro.com/site/
trade.com/cotton.
about/general-faqs/.
53. As above.
85. WWF: Better Sugarcane Initiative, http://wwf.panda.org/what_we_
54. Textile Exchange (2013), Building Integrity, A Case Study, do/footprint/agriculture/sugarcane/better_sugarcane_initiative/.
http://textileexchange.org/sites/default/files/te_pdfs/integrity/Build-
86. International Sustainability and Carbon Certification. Homepage,
ing%20Integrity%20HandM.pdf.
http://www.iscc-system.org/.
55. Marine Stewardship Council, Certified Sustainable Seafood, http://
87. Fairtrade International. Homepage, http://www.fairtrade.net.
www.msc.org/.
88. Forest Stewardship Council. Homepage, https://ic.fsc.org/eu-timber-
56. Aquaculture Stewardship Council. Homepage, http://www.asc-
regulation.46.htm.
aqua.org.
89. Programme for the Endorsement of Forest Certification (PEFC).
57. UN Food and Agriculture Organisation. Homepage, http://www.
Homepage, http://www.pefc.org/certification-services/eu-timber-
fao.org/home/en/.
regulation.
58. ISEAL Alliance. Homepage, http://www.isealalliance.org.
90. European Union Timber Regulation (2013), http://ec.europa.eu/
59. ISO 12875: 2011. Homepage, https://www.iso.org/obp/ environment/forests/pdf/EUTR_Leaflet_EN.pdf.
ui/#iso:std:iso:12875:ed-1:v1:en.
91. Sustainable Forest Initiative. Homepage, http://www.sfiprogram.
60. Leather Working Group (2010), Improving Environmental Stew- org.
ardship, http://www.leatherworkinggroup.com/about/brazil.
92. Tropical Forest Alliance 2020. Homepage, http://www.tfa2020.com.
61. COTANCE (2013), Euroleather, ‘A New Project on Trace-
93. American Tree Farm System. Homepage, https://www.treefarm-
ability of Raw Materials’, http://www.euroleather.com/policies/
system.org.
rawmaterials/131-a-new-project-on-traceability-of-raw-materials.html.
94. The Canadian Standards Association’s Sustainable Forest Manage-
62. Institute for Market Ecology, Natural Leather Certification, http://
ment Standard. Homepage, http://www.csasfmforests.ca.
www.imo.ch/logicio/client/imo/file/sectors/textile/fibres/leather/
leder_20111220.pdf. 95. UNECE and FAO (2013). Forest Products Annual Market Review
2012-2013. http://www.unece.org/fileadmin/DAM/timber/publications/
63. Conflict Free Sourcing Initiative (2014), http://www.conflictfree-
FPAMR2013.pdf.
smelter.org/cfshome.htm.
64. Responsible Jewellery Council. Homepage, http://www.responsible-
jewellery.com/.
65. Kimberley Process. Homepage, http://www.kimberleyprocess.com/.
66. Diamond Development Initiative International (2009), http://www.
ddiglobal.org/.
67. The Jeweltree Foundation, http://www.jeweltreefoundation.org.
68. Partnership Africa Canada. Homepage, http://www.pacweb.org/en/
regional-certification.
69. UN Global Compact, Business for Peace, www.business4peace.org.
70. Roundtable on Sustainable Palm Oil, http://www.rspo.org/.
71. Greenpalm Sustainability, http://greenpalm.org/.
72. Sustainable Palm Oil Platform, Certification Schemes, http://www.
sustainablepalmoil.org/standards-certfication/certification-schemes/.
73. Sustainable Palm Oil Platform. Homepage, http://www.sustainable-
palmoil.org.
74. Belgian Alliance for Sustainable Palm Oil. Homepage, http://www.
sustainabelpalm.be.
75. Say No To Palm Oil. Homepage, http://www.saynotopalmoil.com.
76. Sustainable Agriculture Network. Homepage, http://sanstandards.
org/sitio/.
77. Roundtable on Sustainable Biomaterials. Homepage, http://rsb.org.
78. Global GAP, Homepage, http://www.globalgap.org/uk_en/.
79. Fairtrade. Homepage, http://www.fairtrade.net.
80. Organic Trade Association (OTA) (2013), http://www.ota.com/about/
accomplishments.html.
PHOTO CREDITS:
Cover (clockwise from center): © Mirza Zahidul Alam Shawon: Garment

Worker; World Bank/Curt Carnemark; World Bank/Arne Hoel; iStock:
Palm Fruit and Cooking Oil (Stock Photo: 26352846); iStock: Young Man
with a Heavy Load of Bananas (Stock Photo: 6251427); iStock: Computer
Circuit Board (Stock Photo: 16358242); iStock: Blue Jeans Sale (Stock
Photo: 2380122)
Page 5: © World Bank/Gennadiy Ratushenko

Page 9: ©Washing Diamonds’ (Stock Photo: 9545062):http://www.
istockphoto.com/stock-photo-9545062-washing-diamonds.
php?st=596e73f
Page 13: ©iStock: Cocoa Beans (Stock Photo: 29124824)
Page 14: ©World Bank/Anvar Ilyasov
Page 19: ©iStock: Female Clothing Factory Worker (Stock Photo:
21200972)
Page 23: ©iStock: Fresh Fish in the Market (Stock Photo: 16330335)
Page 28: ©iStock: Glass Factory (Stock Photo: 10977070)
Page 41: ©World Bank/Curt Carnemark
The Ten Principles of the
United Nations Global Compact
Human rights
Principle 1 Businesses should support and respect the protection of

internationally proclaimed human rights; and
Principle 2 make sure that they are not complicit in human rights abuses.
Labour
Principle 3 Businesses should uphold the freedom of association and the

effective recognition of the right to collective bargaining;
Principle 4 the elimination of all forms of forced and compulsory labour;
Principle 5 the effective abolition of child labour; and
Principle 6 the elimination of discrimination in respect of employment
and occupation.
Environment
Principle 7 Businesses should support a precautionary approach to

environmental challenges;
Principle 8 undertake initiatives to promote greater environmental
responsibility; and
Principle 9 encourage the development and diffusion of
environmentally friendly technologies.
Anti-corruption
Principle 10 Businesses should work against corruption in all its forms,

including extortion and bribery.
Published by the UN Global Compact Office

Contact: unglobalcompact@un.org
April 2014

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A Guide to Traceability

A Practical Approach to Advance Sustainability in Global Supply Chains

About this Guide

BSR team: Tara Norton, Julia Beier, Lauren Shields

Part 1: Global Alignment on Traceability  6

Part 2: Traceability in Practice 10

Part 3: Practical Guide for Companies

Conclusion and Outlook for the Future 31

Annex: Traceability by Commodity:

About Supply Chain Sustainability

1. Definition of Traceability conflict areas and avoid purchasing materi-

Beyond food safety, consumers, NGOs, gov- 3. The Impact of Traceability

1. Traceability Models Models with less stringent controls around

Supply Chain Traceability Types

Product Mass Balance Book and Claim

1.1 Product Segregation Identity Preservation

1.2 Mass Balance Cocoa14

has supported sustainable sourcing. There-

Examples of existing traceability schemes by model17

●● Better Cotton Initiative – ●● Better Cotton Initiative – ●● Bonsucro – Credit trading

2. The Landscape of Global Global Collaborative

Fair Trade Labelling Organizations ● ● ● ● ● ● ● ● ● ● ● ●

Forest Stewardship Council (FSC) ●

Global Organic Textile Standard ● ● ●

Global Sustainable Beef Roundtable ●

IDH Sustainable Trade Initiative ● ● ● ● ● ● ● ● ● ● ● ● ● ●

International Federation of Organic ●

ITRI Tin Supply Chain Initiative (iTSCi) ● ●

Leather Working Group ●

Marine Stewardship Council (MSC) ●

Materials Traceability Working Group ● ●

Programme for the Endorsement of ●

Rain Forest Alliance ● ● ● ● ● ● ●

Responsible Jewellery Council ● ●

Roundtable for Responsible Soy ●

Sustainable Forest Initiative (SFI) ●

TE Organic Content Standard ● ● ●

TE Recycled Claim Standard

TE Responsible Down Standard ●

Tropical Forest Alliance 2020 ●

Other Engaged Organizations 3. Best Practice in Traceability

The Model: Collaboration is best practice for traceability

Explanation of key The collaborative scheme needs to be a

Businesses increasingly pursue traceability • Reducing risk

Values and Stakeholder Regulation Global Alignment

1. Reducing risk 6. Meeting stakeholder 8. Meeting legal 9. Standardization

Regulation meet legal requirements to operate in that

Overview of existing traceability related regulation as of March 2014 18

Global Alignment materials where possible. This can be a dif-

not all potential negative impacts. It should

7. Stay the course.

1.Direct investment in improvement pro-

Driver How traceability Other options to

Value and efficiencies Provides a process for Investment in internal systems.

Stakeholder pressure Assures stakeholders that Investment in producer communities.

Regulation Increasing regulation No real alternative where regulation

Global alignment Provides assurance of a Engaging with producer countries to

Part 1: Global Alignment on Traceability 6

Part 2: Traceability in Practice 10

Conclusion and Outlook for the Future 31

1.Direct investment in improvement pro-

Page 5: © World Bank/Gennadiy Ratushenko