Information Technology is playing an important role in evolving FSC’s toolset to protect its reputation and credibility, strengthen assurance, and to combat fraudulent trade claims. Source: Timberbiz
FSC has now expanded its capabilities to detect and respond to risks to include more integrated digital solutions, and the most recent initiatives include the FSC GIS and Earth Observation Portal and Digital Audit Reporting.
Now it has announced the launch of a pilot program for high-risk supply chains of the FSC Blockchain Beta digital verification platform, its latest technology innovation that aims to revolutionize FSC materials traceability and trade compliance with blockchain technology.
What is blockchain and how can it support integrity in FSC supply chains?
Simply put, blockchain is a record-keeping digital technology, and it registers transactions into a digital ledger that cannot be changed (a concept known as immutability). These transactions are recorded in the ledger as a chain of data blocks via a consensus protocol that defines the veracity and data integrity of each transaction before it can be recorded on the ledger.
Unlike public blockchains associated with cryptocurrencies, consortium or “permissioned” private blockchain ledgers allow for access restrictions governed by parties’ permission to participate in the blockchain, even if the parties are not “known” to each other.
Like many global supply chains, forest-related supply chains rely on paper documentation, including a paper trail of invoices, bills of lading, and other “wet” signature/stamp trade paperwork.
Paper systems open the potential for fraudulent claims by cause of tampering with or falsifying documentation to inflate material volumes. Blockchain can fundamentally change how compliance and traceability of FSC materials across supply chains are verified using secure technology, breaking free of paper-based documentation, and exclusively relying on paperwork exchanged amongst organizations to assert trade claims that imply that materials are compliant.
Another important aspect of blockchain is that it helps overcome IT “architectural” and operational limitations related to delivering a full package of immutability, information security, and consensus when the participating parties may be either known or unknown parties to each other.
A certified organization clearly knows their direct suppliers, but generally they do not have knowledge of their trading partners’ suppliers. Blockchain allows trading partners to be connected to all parties handling materials down to the source and to verify the compliance of the materials as they move through the supply chain, without the need to reveal or even identify business relationships beyond those direct relationships an organization already has today.
Blockchain can offer value to certified organizations to support verification that the materials they trade are compliant and traceable to the source. Today, FSC-certified organizations are required to maintain up-to-date material accounting records of the certified materials they trade, and we can tap into these records with blockchain to securely share and verify these point-of-trade exchanges across the supply chain.
The FSC Blockchain Beta is a “permissioned” private blockchain ledger platform designed to verify materials trade compliance across FSC supply chains. FSC is conducting pilot tests of our technology from April to October 2021, and these pilots focus on high-risk supply chains. A select control group of certified organizations will be contacted to participate in the pilot program during this period.
The goal of the pilot program is to demonstrate blockchain technology’s facility to transform trade compliance verification. The pilots will gauge organizations’ means of meeting requisite criteria to share standardized point-of-trade data, and we will gather information on features that would be indispensable to certified organizations.
The FSC pilot program will offer the space to validate blockchain technology with real data and to determine the conditions that enable us to develop enhancements towards wider general availability to certified organizations in the future.
FSC Blockchain will transform materials trade compliance verification and traceability with a secure and trustworthy self-service digital platform to verify real-time “point-of-trade” inputs and outputs of FSC-certified materials.