FSC Trace

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.

FSC Trace is a private user-managed digital ledger designed to validate materials’ trade compliance across FSC supply chains. We employ 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. 

The platform also helps overcome operational challenges by enabling parties, who may or may not know each other, to track materials right back to their origin. If all parties are on the blockchain and have given consent, it allows information to move through the entire supply chain, while keeping other details and the identity of all trading parties throughout the supply chain 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.  

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

FSC Trace 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, FSC Trace 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.

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

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

FSC Trace 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.)

FSC Trace will become fully integrated with forthcoming FSC tools, including Due Diligence Reporting Systems. We are actively exploring ways to make FSC Trace interoperable with other systems, including through APIs, to allow full flexibility for users to integrate with tools that best fit their needs.   

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 FSC Trace 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. 

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

Use of FSC Trace is intended to make chain of custody auditing easier for both certificate holders and auditors. Records kept in FSC Trace 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 Trace. Certificate holders will have access to dedicated reporting functions designed to provide all relevant data required during an audit.

FSC Trace itself does not directly validate or request copies of invoices. Instead, it operates on a consensus mechanism where both trading partners must agree on the details of a transaction—product type, volume, species, and invoice number—before a claim is verified. This agreement process acts as an indirect validation of the invoice details, ensuring consistency and accuracy in the data recorded on the blockchain

Joining the platform will be entirely voluntary, offering certificate holders the flexibility to integrate FSC Trace seamlessly into their operations. 

Absolutely, FSC Trace offers significant value even if only your company is participating. It facilitates the verification of your suppliers' certification status, eliminating the need for manual monitoring on search.fsc.org. Additionally, if you input all your trade data into the blockchain, it will automatically generate species lists, product group lists, and volume summaries. The full potential, especially regarding compliance with regulations like the European Union Regulation on Deforestation-free Products (EUDR), is realized when the entire supply chain participates. This enables the seamless transfer of crucial data such as geolocation and time of harvest throughout the supply chain. 

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

The platform is free for FSC certificate holders. Access to the basic functionality is included within the existing fees paid by FSC licence holders. We may add paid premium features in the future. We are also looking into interoperability with other platforms. There may be additional fees to help cover our costs of providing this technology. 

FSC Trace is in beta release until August 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 Trace. 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 August 2024 access to FSC Trace 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.

FSC Trace users can view their direct trading partners—customers and suppliers—similar to the current FSC system. However, while direct visibility is limited, the blockchain facilitates the movement of data between trading partners further downstream, subject to the control of the data owner, allowing for enhanced traceability and integrity without compromising confidentiality. 

FSC Trace is designed to support and enhance the transparency and integrity of FSC-certified products within the certified supply chain. Currently, FSC Trace is exclusively available to FSC licence holders. Companies who are not FSC licence holders cannot use the blockchain to receive claims and data, and would be dependent on certified suppliers to download and share specific data with them manually on a case-by-case basis.  

FSC Trace 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 Trace 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 FSC Trace 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 FSC Trace. If links are missing in the supply chain, it will not be possible to get back to time of harvest and geolocation.

In FSC Trace 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.

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 Trace 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. 

FSC Trace provides users with valuable information related to the provenance of certified forest products. FSC Trace 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 Trace 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 Trace 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 Trace 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 Trace 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 Trace 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 Trace 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

While FSC Trace itself does not perform automatic checks for deforestation and degradation, it's important to remember that such verifications are a fundamental component of the FSC certification process.  

This rigorous assessment is conducted by qualified auditors who evaluate forests on the ground, ensuring compliance with FSC standards aimed at preventing deforestation and degradation. 

Therefore, whille FSC Trace enhances transparency and traceability within the supply chain, the responsibility for verifying adherence to deforestation and degradation standards remains within the established FSC certification audit process. This means you can rely on the integrity of FSC-certified products without the need for manual checks for deforestation and degradation, as these aspects have already been thoroughly assessed by professional auditors as part of the certification process. 

FSC Trace 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.

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 Trace 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 Trace, 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.

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 Trace.

In future releases, use of FSC Trace 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 Trace.

You can use FSC Trace 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 Trace to demonstrate compliance with regulations like EUDR that require traceability back to source will depend upon all your suppliers using FSC Trace to record sales into your supply chain.

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