FSC claims go digital: how will this affect business?

The platform is currently under development and industry feedback will be essential if the online system is to meet the needs of businesses. 

Why FSC is investing in developing the system is clear. The number of certificate holders has exploded in recent years due to increasing demands for FSC certified products. But any successful brand attracts unwanted opportunists, and FSC is no exception. 

“For the FSC system as a whole, the OCP provides an innovative and efficient solution to maintain and increase trust in the FSC brand, whilst continuing to position FSC as a world-leader in forest certification”, says Phil Guillery, FSC Systems Integrity Director. 

While FSC in the outset developed a system to check each organisation involved in processing and trading certified material, controlling the flow of certified material through the chain using paper documentation has proven too easy to fake. The move online will provide assurance of the authenticity of a claim, protecting the FSC brand which certificate holders and civil society are all investing in.

Single source of truth

Whenever a certificate holder sells their FSC certified products and makes a claim to their customer, they will record the quantity and description of the product, FSC claim, date and customer name and address onto the OCP. 

The platform functions like a bank account, where certified material is transferred instead of money. Each certified operation will have an account. When an organisation purchases certified material, they will receive a claim with the specified volume from their supplier which they can accept if correct or reject. By accepting the claim, the certified volume is transferred from the supplier and will appear in their account. 

To sell their certified products, the organisation will transfer the volume to their customer. Each organisation can see who they have received volume from and who they are selling volume to – transparency is limited to ‘one up, one down’. They cannot see from where the supplies originate from, nor where the products are destined for further down the chain. 

Automatically drawing on information that certification bodies upload to the FSC database, the platform restricts certificate holders to only make claims within the scope of their certificate. This reduces the risk of errors arising from, for example, a change in certification scope going unnoticed or different versions of invoice papers being kept for auditing. 

Importantly, the move online eliminates fraudulent claims entering the system based on falsified documentation, a problem seen with some less serious companies within the FSC system. 

Changing the process, not the content

“We’re not asking for any new information that certificate holders are not already recording. We’re just asking them to do what they are already doing, just doing it differently. Instead of documenting it on paper, they’ll need to record it online”, says Tim Wilson of supply chain traceability experts Historic Futures.

The information that will be required is the same information companies are already recording, as prescribed in 6.1.1 of FSC Standard for Chain of Custody (FSC-STD-40-004 V2-1). Companies will still be able to use their own names for product groups. 

Weighing up the costs

There will be upfront costs for businesses to change systems, but exactly how much depends on each company’s specific processes. The good news is there are gains to be made from processing the claim to other chain of custody requirements. Let’s first look at how a certificate holder can register a claim.

The first of three ways is manually inputting the information using the OCP user interface directly. Enterprises that only process a few claims per year are the likely candidates for this. Dropdown menus are auto-generated from the certificate scope, making it easier for the user.

The other two methods are aimed at those processing larger numbers of claims. The second way enables enterprises to manage bulk transactions via Microsoft Excel by downloading FSC invoices from existing IT systems to Excel, and uploading the spreadsheet to the OCP. 

The third method enables businesses to integrate the OCP directly into their existing IT systems. A plug-in will be provided with a guide that companies’ IT programmers will be able to use to carry out a number of functions. For example, it automatically enters the claim into the OCP when an invoice is generated. Or it automatically accepts claims in the OCP when goods are accepted or an invoice are accepted.

“We’ve been looking at creative ways in which we can align with existing business practices, building on experience from other sectors and learning from extensive outreach to FSC certificate holders”, says Tim Wilson of Historic Futures. 

In the same way you make connections on the professional social media network LinkedIn, certificate holders will need to make connections with the suppliers and customers. To make a new connection, users can search for organisations from the pool of certified businesses in the FSC database. 

This begs the question: what happens if you trade to a non-certificate holder? If the product does not carry an FSC label and no further FSC invoice claims are needed, then a connection is not required. 

Where the product does carry an FSC label, a subscription service for retailers and other non-certificate holders currently being developed would allow them to connect with suppliers and receive verification of an FSC claim. Initial outreach to retailers and others demonstrate that there is interest in such a service, but FSC is currently exploring how to handle this and will be seeking feedback. 

The certified customer will need to confirm the claim before taking physical possession, so how often will the user have to process their claims? This will be largely down to each business and their business practices. 
 

Weeding out embedded costs

There are a number of costs that are embedded in business practices today where efficiency gains can be made. Supplier verification is an important one.

“Companies often go through a time-intensive process of communicating back and forth with their suppliers or customers to check the validity of claims is within their certificate scope. Automating this system will reduce much of this hassle and improve the accuracy of claims,” says Peter Feilberg, CEO of NEPCon.

Certificate holders should have access to Volume Summary production reports by a simple click of a button through the OCP User Interface. “This will simplify the chain-of custody certification process. Certification bodies can see the movement of certified volume directly on the “account” and no additional annual report of certified material will be needed”.

“However, the main benefit of the system is for the many companies and retailers who have made major investments into the FSC system, by efficiently addressing one of the major weaknesses which have been identified with the current system and by that protecting both the investment and the brand name of these companies”, continues Peter Feilberg. “On the other hand, I will expect a major push back especially from certified operation who have found ways around the FSC rules”.

Finally the system will provide valuable global statistic on the production of different types of certified products and certified species. Today, such a system does not exist and it is impossible to generate credible estimates. 

A step towards EU Timber Regulation compliance

The system will be able to provide information on country of origin and species – key information required for the EU Timber Regulation. However full scale traceability is not required in the current CoC standard and lies beyond the scope of the OCP project. 

“The system is built upon technology capable to handle this in the future if businesses desire it”, says Tim Wilson, CEO of Historic Futures. “There are progressive companies who are already pushing for full-scale traceability, despite there being no requirements for this”. 

Access and data security of upmost importance

“We take data security very seriously. We had to when we developed systems in other competitive industries and for retailers such as M&S”, says Mr Wilson. Security measures include ISO-27001 accreditation, industry standard 256bit SSL data encryption over a secure (https) internet connection and the regular hiring of hackers to test penetration. 

The certified operation will appoint the representative who is given access to the OCP, and will be able to grant other users access within that same account. For multi-sites, information will be restricted to each site. It is not yet clear how Group certificates will be handled, whether each member or the Group manager should be given access, or whether both options should be made available. Project Certification may be included in the future after the Project Certification Standard is revised. FSC is looking to gather input on the questions above from stakeholders.

Your views are important

Within the next month, FSC will launch the FSC Online Claims Platform Forum that will include presentations on the system as is it today, and provide opportunities for businesses and other stakeholders to discuss issues that need to considered through the next phase of development. 

“Industry feedback is essential for us to ensure this works for them. It is essential to get feedback from all types of industry in all regions across the globe to ensure we have their needs addressed,” says Emily Crumely, Project Manager for the OCP. 

Opportunities to participate