Supporting corporate due diligence through chain of custody systems

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A new regulatory environment
The need for mass balance models
Exploring the range of risk controls for mixed materials
Focus on Chain of Custody

Introduction

Project details

Project title: Control mechanisms for blended materials

Project lead: Better Cotton

Project partners: Responsible Sourcing Network

Duration: October 2021 - June 2022

Contact: Josh Taylor - josh.taylor@bettercotton.org

Funded by the Swiss State Secretariat for Economic Affairs SECO, through the ISEAL Innovations Fund

A new regulatory environment

Sustainability systems like Better Cotton have been working closely with businesses to drive the adoption of sustainable production practices in different sectors. With the introduction of new, mandatory corporate due diligence requirements, sustainability systems can play an important role in supporting companies to identify, prevent, and mitigate adverse impacts in their supply chains. Chain of Custody (CoC) systems which provide supply chain transparency and reduce risk are key to the success of these partnerships.

The need for mass balance models

Many sustainability systems, including Better Cotton's, have CoC systems based on mass balance models because they are an effective and inexpensive way to facilitate demand for more sustainably produced commodities in complex supply chains. Mass balance models, however, can make full physical traceability difficult. That is why many ISEAL members are exploring new technologies and controls that add to their CoC systems, especially where mass balance is still the only viable option.

Exploring the range of risk controls for mixed materials

This project consisted of two interlocking research projects on controls employed by sustainability systems operating mixed CoC models, with a focus on the implementation of due diligence management systems for mixed supply chains, and the transparency needs of regulated supply chains. Several sustainability systems were interviewed as part of this review and a workshop was held with ISEAL members to share and discuss research findings.

Focus on Chain of Custody

Most systems that have introduced due diligence controls in mixed supply chains have done so in response to increased due diligence legislation. However, the scope of these controls vary considerably. Chain of Custody systems play a major role in supporting synergies between voluntary systems and corporate due diligence efforts. Schemes seeking to drive greater alignment with mandatory due diligence legislation should look at how they can strengthen the application and function of their CoC systems to promote responsible business conduct.