multi-stakeholder initiatives, such as the Better Cotton Initiative (BCI),
Cotton made in Africa, and organic cotton hope to improve social and
environmental conditions in agriculture through the establishment and
implementation of certification and chain of custody (CoC) systems. CoC systems are used to track certified
products or link its environmental, social or other attributes with an end
product or buyer.
initiatives implement one of the following three common CoC systems: physical
segregation, mass balance and book-and-claim. The following is a brief
description and some advantages and disadvantages of each.
Physical segregation: Certified products are physically
segregated from non-certified products at every facility along the supply
chain. Cotton description and ownership documentation accompanies the material
at all stages. Example: organic
The only system that traces the final cotton back
to a certified sustainable source.
It is preferred by many non-governmental
organizations because the sustainable attributes are linked with the cotton
throughout the chain.
Because documentation accompanies the segregated
cotton, data verification should be easier than in other systems.
- It is
incompatible with the bulk of existing cotton trade and processes.
The extra processing, segregation, storage, and
documentation requirements create a distraction from each supply chain actor's
core business, can cause delays in processing, and may lead to additional
charges to customers.
Mass balance: The amount of certified cotton
sourced and sold by each supply chain actor is tracked. However, the certified
cotton and sustainable certificates do not need to be sold together. Certified
cotton does not need to be segregated from non-certified cotton.
Its credibility may be perceived to be higher than
a book-and-claim system as there is a closer physical connection between the
certified cotton and the certificate.
No physical infrastructure investments are
Requires administrative tracking at each stage of
the supply chain, resulting in a more cumbersome system that increases costs
and resource burden.
Falsification of documentation and claims can occur
at every stage in the supply chain, increasing the cost and resources required
to validate claims.
Data verification will be more cumbersome in
non-segregated portions of the supply chain.
3. Book-and-claim: Certified cotton is completely decoupled from
sustainability certificate. Certified cotton would freely flow through
the supply chain, just as conventional cotton does.
trade of sustainability certificates does not affect the trade of physical
cotton, which has clear benefits to market players and market penetration.
and data verification would be easier and more reliable than multiple sites as
required under a mass balance or physical segregation systems.
Provides access to certificate market for small
farmers who may not have any local demand for sustainable cotton or logistics
There are no guarantees that the cotton used for
cottons actually originates from a sustainable farm.
Because of the need for a credible Issuing Body,
setting up a book-and-claim system will require both time and high start up
In order to minimize these
risks, rigorous control must exist for each - and between - systems. A system,
or selection of systems, should be designed to create a level playing field for
all supply chain actors and benefit the environment, farmers, and the industry.
What systems or processes exist
in the cotton supply chain that can serve as a starting point or foundation for
a CoC system?
What additional processes or
systems could be installed to minimize fraud or corruption potential of the CoC
system or claims?
Should the cotton industry
establish a central clearinghouse through which all certified cotton are
registered , better enabling enforcement and claims reconciliation?