The need for traceability
To ensure their supply chain is sustainable, brands should want to know where their products come from, who created them, the conditions under which they were created and their impacts on the environment.
Complex supply chains often go hand-in-hand with a lack of traceability, which in turn makes it hard to make sustainability improvements. Full knowledge of the supply chain is essential to demonstrate a link between corporate sustainable sourcing policy and practice, and actual supply chain sustainability improvements.
Improvements in traceability bring several benefits:
- Brands and retailers can validate claims about products and practices, and communicate these to customers.
- End consumers can trust a product’s origin, which increases their trust and engagement with a brand.
- Farmers can secure contracts more easily, and get better access to markets and services like finance and education. Traceable certification can also help them obtain price premiums.
- Suppliers can see an increased level of trust and sales, and more secure supply. Traceability also improves supply chain management.
Most companies that source sustainable cotton work with certification schemes that are experienced in fulfilling their sourcing commitments and ensuring traceability. When combined with a due diligence approach, this provides a robust approach to sustainable sourcing.
Understanding traceability models
Different sustainability programmes use different traceability models, each of which has advantages and disadvantages. Those attempting to trace their supply chain will follow one or more of the following systems :
- Identity preservation
- Bulk segregation
- Mass balance
- Certificate trading or ‘book and claim’ model
Model 1: Identity Preservation
This approach provides traceability back to a single point of origin, from a farm or group of farms to the gin or final users. Each lot, batch, quantity or consignment of certified product is treated separately. It is physically separated from other certified or non-certified product throughout the supply chain, as is its associated documentation.
This model does not allow mixing of non-certified materials anywhere in the supply chain.
Organic; BCI: from farm to gin; Cotton made in Africa (CmiA): traceability from gin level (cotton bale) to finished product possible; Fairtrade cotton classic model; Fairtrade mass balance programme: till spinner gate; myBMP: from farm to spinning mill.
Model 2: Bulk segregation
In bulk segregation, certified product is kept physically separate from non-certified product through each stage of the supply chain. The mixing of certified materials from different producers is permitted, but documentation denoting the region or country of origin is often kept. All producers must comply with the certification standards.
Textile Exchange standards; Better Cotton Initiative (BCI) – Physical segregation until the bale of cotton is formed; Fairtrade International – Product segregation for cotton, bananas, other fresh fruits, coffee, flowers, nuts, rice, spices; Cotton made in Africa (CmiA): physical segregation up to spinning mill level.
Forest Stewardship Council (FSC) – “FSC Pure Products”; Roundtable for Sustainable Palm Oil (RSPO) – RSPO Segregated System; Marine Stewardship Council (MSC)
Model 3: Mass Balance
In the Mass Balance model, products from both certified sustainable and non-sustainable sources are mixed. As they move through the supply chain, an exact account of volume ratios is kept. In this way, the volume of certified product entering the operation is controlled and an equivalent volume of product leaving the operations (minus about 20% wastage through processing) can be sold as certified.
Better Cotton Initiative – Mass Balance model once the bale of cotton is broken and split into yarn; Fairtrade International – mass balance for cocoa, sugar, cotton and juice; Cotton made in Africa (CmiA): mass balance from spinning mill onwards.
Forest Stewardship Council (FSC) – FSC volume based system; Roundtable for Sustainable Palm Oil (RSPO) – RSPO Mass Balance System; UTZ Certified – Mass Balance Traceability Programme
Model 4: Certificate trading / Book and claim
In this model, certified and non-certified product flow freely through the supply chain. Sustainability certificates or credits are issued at the beginning of the supply chain by an independent issuing body and can be bought by market participants, usually via a certificate or credit trading platform.
This model provides tradeable certificates for certified products. The claim is not directly connected to the certified product but rewards responsible production. It allows outputs to be sold with a credit claim corresponding to the quantity of certified inputs.
Bonsucro – Credit trading system (Block and Claim); RSPO – Book and Claim system; UTZ Certified – Trading & Traceability Programme used in collaboration with RSPO