The U.N. Global Compact and BSR recently launched the world’s first guide on traceability, which highlights the importance of traceability for sustainability purposes and identifies solutions to the multifaceted challenges of tracing raw materials through complex global supply chains. The guide presents a global picture of best practices across sectors and geographies and summarizes practical steps for implementing traceability programs within companies.
I had the chance to speak with Ursula Wynhoven, general counsel and chief of governance and social sustainability at the U.N. Global Compact, to explore the key messages of the traceability guide.
Beier: Why is supply chain traceability important to sustainability?
Wynhoven: Supply chain traceability — the process of identifying and tracking a product or material’s path from raw material to finished good — is a useful tool to gain and convey information about the components of products, parts, and materials, as well as their transformation throughout the value chain.
Traceability can verify certain sustainability claims about commodities and products, helping ensure good practices and respect for people and the environment in supply chains.
Beier: Who should read this guide, and what can they expect to learn from it?
Wynhoven: The target audience for this guide is professionals who work on supply chain, procurement, sourcing, and sustainability issues, and who may be considering traceability as a tool to improve their companies’ supply chain sustainability. The guide provides practical information for those who are new to the topic and for those already engaged in traceability. It is written for both large multinational companies and small businesses.
Beier: You recommend participating in a global, independent, multistakeholder scheme when considering developing a supply chain traceability program. Why is this important?
Wynhoven: Collaboration along the supply chain is critical to the success of traceability. It is also usually more cost-effective to join a proven initiative, and joining forces can help tackle the systemic sustainability issues that traceability seeks to address.
The agriculture and retail industries, for example, have particularly complex supply chains. Schemes such as the Forest Stewardship Council or Marine Stewardship Council have enabled the development of credible and robust chains of custody standards, which have had an enormous positive impact on the sustainability of timber and fish.
While we recommend getting involved in an existing scheme for a commodity where it exists, it is important to note that traceability schemes may only uncover one set of risks and not all potential adverse impacts. Of course, traceability is not a substitute for due diligence or the corporate responsibility to respect human rights.
Beier: What other steps do you recommend for companies considering developing a supply chain traceability program?
Wynhoven: The guide outlines seven steps businesses can take to implement traceability. First, the company should identify key commodities and map its supply chain, in collaboration with key suppliers. Second, we recommend gaining a full understanding of sustainability issues relevant to those commodities and identifying whether traceability is the best way to mitigate those risks.
Once the company has identified that traceability is the right way to mitigate sustainability issues, it should develop the business case for traceability and take action either by getting involved in an existing traceability scheme or by reaching out to peers and stakeholders to start one.
As a next step, engagement with staff and suppliers will promote solid internal practices and processes. Finally, because traceability can be difficult and time-consuming at first, we recommend staying the course.
Beier: What is your vision for the future of supply chain traceability?
Wynhoven: As traceability grows in impact, credibility, and cost-effectiveness, we envision that companies will increasingly undertake traceability programs to improve their supply chain management. Consumers and regulators are increasingly demanding more information about where products come from and the conditions in which they were made.
Innovations and technologies supporting traceability are also on the rise, and we believe that advances in this area will allow traceability to become the norm. It is possible to see a future where full product and supply chain information is readily available to consumers. Technologies that enable this by simply scanning a product’s barcode with a smartphone already exist, and it is easy to see this trend evolving as technology improves.