Introducing FSC Blockchain

Transforming Supply Chain Integrity
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What is blockchain?

Blockchain is an innovative digital technology that keeps a secure record of transactions. It helps trading partners reach an agreement on transaction details like volume, product, and species. Once a transaction is on the blockchain, it cannot be edited or deleted without a record of the change being recorded, ensuring a robust audit trail.  
 
And perhaps most importantly; in FSC our blockchain will act as a secure platform for trading partners to exchange data while protecting confidential information throughout the supply chain.

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How can blockchain improve FSC’s supply chain?

We are dedicated to advancing supply chain integrity within the FSC system. We are therefore excited to launch FSC Blockchain Beta in January 2024 for selected pilot supply chains, with full release for all FSC Licence Holders expected in June 2024.  

This private blockchain ledger platform is designed to validate materials’ trade compliance across FSC supply chains. It is a self-service digital platform offering security, trustworthiness, and the potential to revolutionize trade compliance verification and traceability. 

Linking supply chains from forest to final product, FSC Blockchain empowers seamless data flow throughout the entire supply chain to deliver both verification and traceability of supply chains, whilst ensuring participants are always in full control of their data, and able to decide who can see what data and when, thus safeguarding commercial confidentiality. 

Supporting FSC licence holders in regulatory compliance and EUDR

FSC Blockchain is a pivotal platform in fulfilling FSC's commitment to assisting licence holders in due diligence and complying with evolving regulations globally. It will assist companies by: 

  • Verifying the certification status of suppliers at the point of transaction. 
  • Generating verified and traceable claims regarding products traded between themselves and trading partners. 
  • Passing relevant data about the raw materials comprising FSC-certified products, including information such as geo-location of origin, time of harvest, species, product groups, and other essential data points. 

These data points will support companies needing to address legislations such as European Deforestation Regulation (EUDR), the European Timber Regulation (EUTR), the US Lacey Act and the Australian Illegal Logging Prohibition Act amongst other legislation currently in place or under development and implementation. 

Combined with the upcoming FSC Regulatory Module and other technology tools, FSC Blockchain Beta program will systematically transform the verification, data enrichment, and connectivity of claims about FSC-certified products throughout supply chains. Jointly these new FSC tools make out the new FSC offering FSC EUDR Aligned, which will support companies throughout forest supply chains to meet their EUDR obligations. 

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How can I get access to FSC Blockchain

FSC Blockchain is currently in Beta mode, undergoing rigorous testing within select pilot supply chains.

The aim is to refine and optimize its functionality based on real-world scenarios and user feedback.  

We anticipate opening the platform for all certificate holders on a voluntary basis from June 2024.  

This phased approach allows us to ensure a smooth transition, fostering collaboration and feedback from diverse stakeholders within the FSC community. 

Learn more at our reoccurring webinars

Starting February 2024, we will initiate a series of regular webinars to showcase FSC Blockchain and address any inquiries our licence holders and other interested stakeholders may have.  

These interactive sessions aim to provide in-depth demonstrations, offering a firsthand look at the functionalities and benefits of FSC Blockchain 

Join our webinars!
Every second month, we host a webinar for licence holders to learn more about FSC Blockchain.
Register now →

6 Ways FSC Blockchain Enhances Supply Chain Verification

Once fully developed and released the FSC blockchain will support supply chain verification in multiple ways.
Permissioned ledgers

Permissioned Ledgers

Unlike public blockchains associated with cryptocurrencies, our FSC Blockchain utilizes consortium blockchain ledgers, also referred to as "permissioned" private blockchain ledgers. These ledgers incorporate access restrictions, allowing only authorized parties to participate. This ensures a secure and controlled environment, even when parties do not have a direct contractual relationship with each other.

Secure technology

Secure technology

Moving beyond traditional paper-based record-keeping systems, our system incorporates secure blockchain technology to minimize the risk of fraudulent claims through tampering or falsification of documentation. Introducing a digital option enhances the ability to verify materials FSC compliance, supporting fully connected and verified supply chains.

Access to all parties

Access to all parties

FSC Blockchain establishes connections among trading partners at every stage of the supply chain, from forest to finalized product. This interconnectedness enables seamless compliance verification of materials throughout the supply chain without revealing the entire set of businesses participating in the supply chain unless approved by the individual companies.

Real-time verification

Real-time verification

FSC-certified organizations are mandated to maintain material accounting records of their certified materials. Leveraging blockchain technology allows for instantaneous viewing and sharing of information, ensuring the authenticity of point-of-trade exchanges across the entire supply chain.

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Aligned with EU Regulations

FSC Blockchain will be fully aligned with upcoming and existing regulations in the EU region, ensuring compliance with evolving standards. By adopting our blockchain solution, organizations can proactively prepare to meet regulatory requirements, fostering a trustworthy and compliant supply chain environment.

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Integration with FSC Tools

FSC Blockchain will be fully integrated with other forthcoming FSC tools, including the FSC Risk Assessment Framework, Earth Observation Tools, and Due Diligence Reporting Systems. This integration enhances the blockchain's capabilities, providing a holistic approach to risk management, environmental monitoring, and due diligence reporting within the FSC ecosystem. Embrace a synergized and efficient solution for robust supply chain management. 

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Unlocking Future-Ready Certification: Empower Your Supply Chain with FSC Blockchain!

In realizing the full potential of FSC Blockchain, we recognize the crucial role our licence holders and wider group of stakeholders play.  

We seek the collaboration and support of our licence holders in onboarding their supply chains onto the blockchain. Joining the platform will be entirely voluntary, offering certificate holders the flexibility to integrate FSC Blockchain seamlessly into their operations.  

Together, we can shape a future where FSC Blockchain becomes a cornerstone in elevating the integrity and efficiency of global supply chains. 

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Mendocino Redwood Company,
FSC Canada
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Continuous Development for Enhanced Usability

Our commitment to innovation extends beyond the beta phase. Throughout 2024 and 2025, FSC Blockchain will receive regular iterative releases to improve the user interface and make new features available. Additional features will be systematically integrated to add further value for FSC licence holders, and ensure tight alignment with new regulatory requirements. 

These ongoing efforts are geared towards  significantly reducing the administrative burden associated with certification and regulatory compliance, making FSC Blockchain an invaluable tool for streamlined and efficient supply chain management. 

How do I get more information?

We know and understand that many are eager to delve into the details of onboarding and the specific requirements and possibilities with using FSC Blockchain.  

To help provide answers and the detail level needed, we have developed a section of Frequently Asked Questions (FAQ), which will undergo regular updates as the FSC Blockchain platform prepares for its public release in June 2024. 

If you have additional questions not covered in the FAQ, feel free to reach out directly to us at digitalinput@fsc.org

General about blockchains

Blockchain basics: What is it? How does it work?

Blockchain, in simple terms, is a secure digital ledger that records transactions across multiple computers in a permissioned network. At FSC, we utilize this technology to enhance the trust and transparency of our global forest certification process.

You can think of blockchain as a non-editable digital logbook, used by FSC to ensure the trustworthiness of our global forest certification process. In this digital logbook, we create a chain of 'blocks,' each containing important information about forest certification and the products that derive from the forest.

Now, imagine this logbook is shared among companies, who trade with each other. Each of these companies has their own copy of the logbook. When they want to add a new forest-based product or update existing information, both trading partners must agree that the information is correct.  

Once both parties agree, the new information gets written into their logbooks, and this information is linked to the previous one, creating a chain. What's unique is that once something is written in this logbook, it cannot be erased. It's like writing in pen instead of a pencil. So, if anyone tries to tamper with the information, everyone in the chain will notice. This not only enhances the security of our certification process but also makes it extremely difficult to tamper with the data once it's on the blockchain.

How can blockchain support integrity in FSC supply chains?

Blockchain is a secure digital ledger recording non-editable transactions, ensuring data integrity. FSC employs a private consortium blockchain, which, unlike public blockchains used in cryptocurrencies, allows for access restrictions, and enables participants to control, which data they choose to share with whom.

In traditional forest supply chains, paper documentation can lead to fraud, simply because it can be difficult to verify and audit. Blockchain enhances compliance and traceability, by replacing paper-based claims with secure technology, where changes will always leave a digital trail, making it much easier to complete robust auditing.

Blockchain also helps overcome operational challenges by enabling parties, who may or may not know each other, to track materials right back to their origin. This allows information to move through the entire supply chain while keeping business sensitive data private. FSC believes that blockchain technology will prove indispensable in helping certificate holders meet the requirements of new regulations such as the European Union Regulation on Deforestation-free Products (EUDR), because it gives certificate holders the ability to securely track and verify the compliance of materials throughout the supply as well as share data on regulatory requirements such as time of harvest and geolocation across a supply chain.

Are blockchains energy consuming and bad for the environment?

Blockchains can indeed be energy-consuming, especially public ones like Bitcoin, which rely on complex consensus mechanisms. It is these consensus mechanisms, and the incentives offered to participants to support them (the mining of new Bitcoins), that require huge amounts of energy to run.

However, a private consortium blockchain, such as the one we are using, does away with these requirements, meaning that the blockchain is only slightly more energy intensive than a normal database.  At FSC we are committed to sustainable practices and will always make responsible technology choices that consider the environmental and social impacts of our operations

Background about FSC’s blockchain

What problem is the FSC Blockchain designed to address?

The FSC Blockchain is an evolution of our existing systems for ensuring integrity in our certification process. Currently, we must rely on Transaction Verification and subsequent investigations to detect potential systematic fraud. These methods, while effective, can often be used retrospectively, identifying issues after they have occurred and potentially reached consumers. It also involves a complex process with multiple parties to maintain confidentiality in business relationships.

In contrast, the FSC Blockchain improves efficiency and provides timely, verified information, while still protecting the privacy of business interactions. This approach allows for quicker, more proactive responses and enhances our ability to detect and address issues before they escalate, thus protecting the credibility of FSC and our certified organizations.

Who can join the FSC Blockchain?

Once rolled out, FSC Blockchain will be open to FSC certificate holders who have a FSC certificate or promotional licence agreement.

Can I use FSC Blockchain for my non-certified products as well?

The FSC Blockchain is designed exclusively for trading products with FSC claims. It cannot be used for non-certified products at this time. (It can be used for FSC Controlled Wood. See below.)

Does the FSC Blockchain only cover timber and paper materials?

No. The FSC Blockchain provides traceability for all forest-based products that FSC certifies, including timber, paper and Non-Timber Forest Products (NTFPs) like rubber, bamboo or honey.

Will the FSC Blockchain be interoperable with other systems?

FSC is actively exploring ways to make the FSC Blockchain interoperable with other systems. Our goal is to ensure flexibility for our certificate and licence holders, allowing them to choose the digital tools that best fit their company's setup. We have designed the FSC Blockchain to be interoperable, enabling our licence holders to exchange data and information within and across organisations.

The primary mechanisms for supporting interoperability will be an Application Programming Interface (API), and the ability to add custom fields, through which you can add external unique identifiers to products and transactions, and thus allow you to reference specific records in other IT systems you choose to use.

We will update the page with more information on  specific integrations that we build.

How will FSC ensure compatibility with established data frameworks and structures?

FSC is committed to using industry-standard data frameworks wherever possible. The Blockchain data formats and API will follow the standards set out in the ISEAL Core Metadata Standard, developed in collaboration with the ISEAL Alliance of sustainability labelling schemes

Will the FSC Blockchain replace the traditional paper trail?

Use of FSC Blockchain is intended to make chain of custody auditing easier for both certificate holders and auditors. Records kept in FSC Blockchain will in the future be able to replace the current paper trail used by certification bodies during the audit process. Documents  relevant to any point in the supply chain, such as harvest permits, can be digitally attached to transactions recorded in FSC Blockchain. Certificate holders will have access to dedicated reporting functions designed to provide all relevant data required during an audit.

Will use of the FSC Blockchain be mandatory?

Participation in the FSC Blockchain is entirely voluntary. It is a tool that FSC is making available to FSC licence holders and the choice whether to use it or not is yours.

Can FSC Promotional Licence Holders use the FSC blockchain?

FSC Promotional Licence Holders (PLHs), who trade with FSC-certified finished and labelled goods without altering them, will be able to use the FSC Blockchain, once it is rolled out for all user groups. 

What is the cost associated with participating in the FSC Blockchain?

FSC does not charge an additional fee for using FSC Blockchain. Access to the basic functionality is included within the existing fees paid by FSC licence holders.

In the future, some premium features on the FSC Blockchain may be made subject to an additional fee to help cover our costs of providing this technology.

When will I be able to join the FSC Blockchain?

The FSC Blockchain is in beta release until June 2024. In this phase we are collaborating with selected supply chains to test and refine the system. Our focus is to ensure its reliability and effectiveness.

FSC licence holders, who are taking part in the Beta phase, will be able to invite a limited number of their trading partners into the trial. You may therefore be invited by your trading partner to join them as an early adopter and Beta user of FSC Blockchain. From 2024 Q2, the Beta phase will be expanded to further participants in a priority access scheme. If you would like your organization to be included in that priority access scheme, please register your interest here.

From June 2024 access to FSC Blockchain will be rolled out to all FSC certificate holders.

Stay informed of progress on the development and rollout plans by joining our reoccurring webinars, which you can sign up to here.

How can I join the FSC Blockchain Beta phase?

At present, FSC certificate holders can join the FSC Blockchain Beta either via direct invitation from FSC or via an invitation from a trading partner, who is part of the Beta phase.

From 2024 Q2, the Beta phase will be expanded to further participants in a priority access scheme. If you would like your organization to be included in that priority access scheme, please register your interest here.

Interested companies will be evaluated and selected based on ensuring a representative user group during the Beta phase.

We will contact you directly on the email indicated in the form, if your company profile matches a user type, we need to pilot with.

FSC Blockchain and regulatory compliance

How does the FSC Blockchain help with regulatory compliance, such as with EUDR?

The FSC Blockchain is designed to assist FSC Licence Holders in complying with regulations like the European Union Due Diligence Regulation (EUDR) in the following ways:

  1. Verification of Suppliers: It enables instant verification of your suppliers' certification status during transactions, ensuring you source from certified, EUDR-conformant sources. .
  2. Verified Traceability: The blockchain provides verifiable information about the products you trade, tracing the product back to the source forest* and harvesting site, as required by EUDR.
  3. Comprehensive Data Collection: It records vital details about raw materials in FSC-certified products, such as geographic origin, harvest time, species, and product groups.
  4. Transmission of Legality Documents: FSC Blockchain provides a mechanism to attach concession agreements, harvesting licences, export permits, and other documents necessary to demonstrate a product has been sourced legally, with those documents associated directly with the relevant products, and thus available to you and downstream trading partners whenever needed.

Utilizing the FSC Blockchain in combination with tools like the forthcoming FSC Regulatory Module enhances the verification process, enriches data, and connects claims across supply chains. This not only aids in regulatory compliance but also supports sustainable and responsible business practices.

*Provided that the entire supply chain is part of the FSC blockchain. If links are missing in the supply chain, it will not be possible to get back to time of harvest and geolocation.

How does the FSC Blockchain render all product-related data immutable?

In the FSC Blockchain system, once details of a transaction have been matched (i.e. agreed by both buyer and seller), the transaction is written to the blockchain, and the details become immutable – that is unchangeable without a separate record and notification of the change being made. This approach ensures data integrity, ensuring it cannot later be altered.

Will FSC Blockchain be interoperable with the EUDR required platform Traces?

At present, the European Commission has not provided any details as to how platforms can be made interoperable with Traces.

However, it is our intention to make FSC Blockchain interoperable with Traces through the forthcoming FSC Due Diligence Reporting System. We will be monitoring the development of Traces closely and share information here if and when direct interoperability is made possible by the European Commission. 

What data will FSC Blockchain help me get?

The FSC Blockchain provides users with valuable information related to the provenance of certified forest products. FSC Blockchain defines various standard data fields which relate to core common concerns within certified supply chains and/or that may be needed for regulatory compliance. Defining these core fields ensures everyone can talk the same language.

In addition, FSC Blockchain will allow participants to define their own data fields to facilitate sharing of specific data items that are of interest to you.

The core data fields within FSC Blockchain include:

  1. Species: The blockchain allows you to ascertain the exact species or set of species used in creation of a product.
  2. Product Type: FSC Blockchain records both the product category according to the FSC classification scheme (link to 40-004A) – this is obligatory, and, optionally, the Harmonized System (HS) code as is used to record international trade around the world and determine customs duties due. Use of HS codes is a mandatory part of compliance with several regulations such as the Lacey Act, EUTR and EUDR.
  3. Volume/Mass/Weight: FSC Blockchain will allow you to record trades by either volume or mass/weight or both, and to use the units of your choice. If you typically record trades by volume but wish to access European markets, you should include weight as well since that is a requirement of EUDR.
  4. Geolocation: FSC Blockchain allows forest managers to submit geolocation data on the harvesting block from which products have been sourced. This field is not mandatory, but can be critical for regulatory compliance, e.g. with EUDR.
  5. Time of Harvest: This is a specific requirement of EUDR. FSC Blockchain allows the entry the start and end dates of harvesting.
  6. Country of Production: Another field relevant for regulatory compliance. This can be separately recorded for each point along the supply chain

Can users attach documents relevant to a product’s provenance?

FSC Blockchain will allow users to upload and tag relevant documents, such as social compliance documentation, chemical usage product sheets, harvesting permits, or similar records. Many of these documents will relate to the source forest, but all users along the supply chain have the option of attaching documents.

How will geolocation data become available on the FSC Blockchain?

Collecting geolocation data is the responsibility of the forest manager; there are various technologies and tools available on the market that can assist with this.

In FSC Blockchain there is a dedicated but optional field for the forest manager to upload this data – specifically on the harvesting block (as required by EUDR) – where it will be checked against the boundaries of the certified forest.

As with all data uploaded to FSC Blockchain, this geolocation data can be shared with downstream participants, but always at the option of the data owner – in this case the forest manager – who provided the data in the first place.

How does FSC Controlled Wood integrate with the FSC Blockchain for EUDR-compliant supply chains?

FSC Controlled Wood is material from acceptable sources that can be mixed with FSC-certified material in products carrying the FSC Mix label. Typically, this is tracked to the region of origin, not to the precise location and time of harvest as required by EUDR.

Controlled Wood enters FSC-certified supply chains via a Chain of Custody (CoC) Certificate Holder who must implement a Due Diligence System to ensure it meets the definition of Controlled Materials. Such CoC Certificate Holders will play the part of a forest manager in entering forest origin data for Controlled Wood into FSC Blockchain.

 In future releases, use of FSC Blockchain may be extended to include non-certificate holders who supply FSC Controlled Wood, releasing the CoC certificate holder from entering such forest origin data into FSC Blockchain.

Can I use the FSC Blockchain without my entire supply chain using it?

You can use the FSC Blockchain even if not every part of your supply chain is on the platform, and the system will provide some immediate value to users in collating and verifying their transaction data. However, maximum value will be obtained when all companies back to the source forest manager are participating. In particular, use of FSC Blockchain to demonstrate compliance with regulations like EUDR that require traceability back to source will depend upon all your suppliers using FSC Blockchain to record sales into your supply chain.

See question “How will the FSC Blockchain be interoperable with other systems?" as well for additional relevant information.

Data security & transparency

How is my data secured on the FSC Blockchain?

Your data will be secure on FSC Blockchain. All data uploaded to FSC Blockchain will be immediately encrypted using an encryption key unique to your organization. Even FSC will not be able to read the data.

Who can access my organization's data on the FSC Blockchain?

Your organization's data on the FSC Blockchain is under your complete control and ownership. You decide what information to share and with whom. The system allows you to tailor your data sharing for each of your trading partners. For instance, you might choose to always share certain details, like time of harvest and geographic location, with one partner, while opting for on-request or one-time sharing with others.

It's important to note that FSC itself does not have access to individual company data on the blockchain. We will only be able to view aggregated anonymized data across the entire FSC system.

Using the FSC Blockchain

What training and support resources are available for the FSC Blockchain?

To assist users with the onboarding process and daily use of the FSC Blockchain, we will provide a comprehensive range of support materials. These resources will be available directly on the FSC Blockchain platform and will include both written guides and video tutorials. To cater to our global user base, these materials will be accessible in multiple languages, ensuring clarity and ease of understanding for everyone.

Additionally, we are committed to offering ongoing support through regular training sessions. Throughout 2024 and 2025, we will host bimonthly information and training sessions. These sessions are designed to help users familiarize themselves with the platform, understand its functionalities, and stay updated with any new features or updates. This blend of resources and live support is part of our commitment to making the transition to and usage of the FSC Blockchain as smooth and efficient as possible for all our users.

You can sign up for the planned webinars for 2024 here .

How is data validated on the FSC Blockchain?

Trading parties must agree on the following for a transaction to be written to the Blockchain:

  • Who your trading partners are (down to FSC license code)
  • Invoice date
  • Product category
  • Species composition
  • Quantity (either volume or weight)

Once one of the trading parties has uploaded to FSC Blockchain details of a transaction, all the details will be visible to the other trading party on the FSC Blockchain app, with the exception of Quantity. For a transaction to be matched and written to the Blockchain the second trading party must also enter the quantity. The two figures must be identical within an error margin of ±2%.

Note that it is not necessary to use the FSC Blockchain user interface to match individual transactions. You can use the bulk upload and API channels to upload transaction data: if it matches with data already provided by your counterparty, a match will automatically be made, and the transaction written to the FSC Blockchain.

How does the FSC Blockchain handle errors in data entry?

Since data on a blockchain is immutable, entered data cannot be deleted once submitted. But of course, mistakes during entering will occur, and therefore it is possible to record corrections to data that has already been entered on the FSC Blockchain.

Similar to how edits are captured in accounting systems, FSC Blockchain will record the updated information as a new entry which is marked as a correction to the original entry. If the edit is done to a validated transaction, the change will have to be agreed with your trading partner, and the supply chain status will change from “validated” to “unvalidated” with this visible to all downstream trading partners.

How can I upload data to FSC Blockchain?

  1. Direct Entry: Individual transactions can be recorded directly on the FSC Blockchain via the application website. This method is user-friendly and accessible, ensuring that companies of all sizes can participate effectively in the blockchain. It will be most appropriate to small companies with only occasional trades, and when you are first learning how FSC Blockchain works.
  2. Bulk Uploads: Companies can opt for bulk uploads of spreadsheets, which can cover multiple transactions over a specific period. This method is efficient for managing large volumes of data.
  3. API Integration: Certificate holders can also choose to integrate their internal systems with the FSC Blockchain using an Application Programming Interface (API).

How can FSC Blockchain support my FSC Chain of Custody Certification?

A key aspect of the FSC Blockchain is its capability to automatically handle various elements of the FSC certification process. This includes the automatic generation of Material Accounting Records and volume summaries.

It will also maintain a list of trading partners and periodically verify their ongoing certification. By automating these tasks, the FSC Blockchain will relieve certificate holders from the need to manage these lists externally, significantly reducing their administrative burden.

How does FSC Blockchain handle transactions involving FSC Controlled Wood?

FSC Controlled Wood, which are forest-based products verified as low risk and permissible in limited volumes within the FSC system, will be fully supported by the FSC Blockchain.

The easiest way to introduce FSC Controlled Wood is to source from forests which are directly certified to the FSC Controlled Wood Standard. These forests will as part of their certification process be able to supply all required information and have been verified by a certification body as low risk.

However, in the FSC system it is also possible to introduce FSC Controlled Wood from forests of low risk, which are not certified. Companies doing this must already implement a Due Diligence System to ensure appropriate controls on these inputs are applied. Such companies will be able to enter relevant data on the sources of their Controlled Wood supplies directly into FSC Blockchain.

See more under the question How does FSC Controlled Wood integrate with the FSC Blockchain for EUDR-compliant supply chains?