Supply chain model: Chain of Custody

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Supply chain model: Chain of Custody

Supply chain strategy for sustainable products

Customers are increasingly demanding sustainable products, and are becoming ever-more alert to instances of greenwashing, so businesses offering sustainable products must also consider how their claims can be backed up. This article outlines the value of Chain of Custody, to certify products as sustainable.

Beyond talk of sustainability

Sustainability is now a business norm, whether it’s driven by compliance, growing customer demand, or to align with values and strategy. Many companies have begun their journey to deliver sustainable products but, as public consciousness and understanding grow, so does the level of scrutiny. Organisations are increasingly being held to account for making unsubstantiated claims, or ‘greenwashing’, while well-intentioned but vague sustainability labels won’t wash in a market that wants to know the specifics: credentials must be shown to be credible.

The difficulty often lies in the complexity of the supply chain – particularly with large-scale production and multiple, global suppliers. Soy and palm oil are widely used ingredients but linked to deforestation; single-use plastic items can contribute to ocean pollution; while coffee production is often associated with modern slavery. Businesses seeking to be genuinely sustainable must therefore understand the implications of their purchasing – as well as production – choices. Gaining that insight, and sharing it with customers, requires visibility across the whole supply chain, from raw materials through to sales and delivery.

The Chain of Custody approach

Chain of Custody (CoC) offers a way to trace, verify, document and aggregate the history, location and application of every item in the whole supply chain, to assure the sustainability credentials of the final product. The four models – Identity Preservation, Segregation, Mass Balance and Certificate Trading – offer different ways to certify a final product in relation to its component parts.

Identity Preservation 

Identity Preservation is the most rigorous, in which each product is certified, from a single source, and kept physically and administratively separate from non-certified products throughout the supply chain. A striking example is the sunglasses produced The Ocean Cleanup, using plastic from a single source: the Great Pacific Garbage Patch, where plastic waste accumulates, drawn together by the ocean’s currents. The whole process, from source materials to final product, is traceable, audited and certified by DNV, a leading global player in maritime certification.

Segregation

Segregation follows a similar path to Identity Preservation, but allows a product to have multiple sources, as long as all sources meet the same certification standard. This is common in, for instance, coffee production: a shipment of beans can be sourced from several farms (all certified to the same standard), which results in coffee that can be certified as sustainable, but not single-origin.

In both Identity Preservation and Segregation models, the ingredients in any sample of the final product could be physically traced back along a chain of certified steps, while the other two models provide a more abstract approach.

Mass Balance

Mass Balance allows certified and non-certified ingredients to be combined, as long as the input and output quantities of certified ingredients match: for instance, a product line that is 50% certified must, overall, have used 50% certified ingredients. No individual product sample can be traced to certified components but, in aggregate, companies or sites – or batches of product from those companies or sites – can be proved to contain the given proportion of certified ingredients over a specific period of time. In the chemicals industry, for instance, recycled plastics can be created from a mixture of virgin and reprocessed plastic ingredients. While their overall mix as inputs and outputs of a production batch can be accounted for, the exact mix within any sample product is unknown.

Book & Claim

Book & Claim, or Certificate Trading, involves issuing certified “credits” at the beginning of the supply chain, whilst downstream sourcing can be separated and products can flow uncontrolled in between. As these certificates don’t relate to specific products, no physical traceability is provided, and certified batches of end product could contain no certified ingredients. As such, this approach is not strictly a CoC model, but it does advocate sustainable practices in sectors where maintaining a physical connection throughout the supply chain is difficult

The aviation industry is piloting a Book & Claim model for Sustainable Aviation Fuel (SAF), in response to business customers demanding lower emissions from their carriers. SAF is not produced near every location that aircraft visit and refuel, so the trial allows airlines to lower their emissions by ‘buying’ SAF, even if conventional fuel is supplied at some locations. This is balanced by other aircraft physically receiving SAF, even if their operators have contracted for conventional fuel. A Book & Claim Registry provides an independently verified account of SAF quantities – and the associated emissions – supplied (or ‘booked’) and purchased (or ‘claimed’). As a result, the greenhouse gas reductions associated with buying SAF will ultimately correspond to the SAF actually being burnt in the skies.

Conclusion

Although these models offer a useful framework, all involve many certifications, and the current standards are by no means unique, consistent or meaningful. For instance, some standards allow products to be described as “recycled” even if they contain very little recycled ingredients (e.g., 5%). A key part of the CoC process, then, is not only obtaining certification, but identifying and selecting the most suitable standard and, where necessary, making product or process adjustments to become compliant.

Customer demand for sustainable products is accelerating, and many businesses are struggling to respond fast enough, due to the scale and complexity of the undertaking. Delivering assured sustainable products could involve changing suppliers or processes then, once sustainability is achieved, obtaining certification of the fact. Chain of Custody offers an effective framework for businesses wanting to become more transparent about their sustainability, and can, longer-term, provide a clear focus for supply chain transformation

For more information please contact the authors Dieuwertje Ewalts and Roel Smouter.

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