Screen Shot 2015-10-30 at 8.56.27 AMAmong those who are following the pending update of the FSC Chain of Custody standard (FSC-STD-40-004 v.3-0 D2), one item has risen to the top of everyone’s list.  That item is called Transaction Verification.

Transaction Verification exists – officially & currently – in 2 forms:

1) as clause 1.7 in the latest draft of the standard

2) as described in a 20 page Discussion Paper released by FSC-IC last month.

It also exists in the extensive (and very expensive) 3-year effort by the FSC-IC staff to develop and promote an online transactional database called the Online Claims Platform.

Some History

MixedWood began writing about the Online Claims Platform (OCP) over 2 years ago.  At that time, it was a little-know project being run by a small group of FSC-IC staff.  As more detail came to light, we followed the subject more closely.  In January 2014, we called it “A big mistake”.  In September 2014 we discussed FSC’s after-the-fact justification of the project and introduced The Myth of The Gap.  The term Transaction Verification was introduced with the first CoC update draft nearly a year ago, followed by more justification and exploration for the need to overhaul CoC as we know it.  Early this summer, FSC released yet another ambitious initiative aimed simultaneously at demonstrating a fundamental “Gap” in CoC and promoting its preconceived solution to the problem.

Throughout all of this debate and discussion, the central theme has remained consistent.  FSC staff have been determined to demonstrate that a serious flaw (The Gap) exists in the CoC market, and that they have – through their OCP database – designed a solution.  The key flaw with this presentation is that they arrived at it backwards:  they designed their solution before they looked for the problem.  A second problem is that they failed to listen to their business partners.  The first problem remains, but we have hopes that some progress may be made on the second.

Some New Ideas

During the extensive discussions of the past year, it has become clear that Transaction Verification is opposed by a large majority of FSC’s business stakeholders.  In the report of public comments on the 1st CoC draft (a 297 page document!), nearly 50 pages is devoted to this subject alone.  The vast majority of this commentary is negative.

As a result, FSC produced a Discussion Paper (FSC-DIS-40-009) devoted to Transaction Verification.  It was released just after the latest CoC update draft last month.  The title of the paper is a bit bizarre:  “Transaction Verification: Alternatives for strengthening and streamlining the FSC Chain of Custody”.  We can acknowledge the intention to strengthen CoC, but it is rather naive to suggest that a proposal that generates 50 pages of negative comment from users, and requires a 20 page paper to explain, can be called “streamlining”.  Despite this odd beginning, we do see some promising content.

The Discussion Paper is clearly a defense of the staff’s position in favor of OCP implementation.  It does, however, introduce some helpful ideas that are worth pursuing – some of these new ideas can be found in earlier MixedWood commentary as well as in the extensive input from business stakeholders.

The paper presents 6 options for consideration, which it identifies as Options A-F.

  • Option F is the “no change” option.  It is treated rather dismissively.
  • Options A, D, & E are essentially similar.  All required implementation of the OCP or some unnamed alternative that functions in the same way.  It is clear that FSC staff favor this approach, but equally clear that the business community is likely to reject this approach.
  • Option C suggests a protocol that would require Certification Bodies to routinely sample and verify transactions outside the scope of a client contract.  In effect, reaching up into the supply chain to re-verify the validity of claims made by separately-certified suppliers.
  • Option B suggests a protocol that would require Accreditation Services International (ASI) – the accreditation arm of FSC – to operate and align its CoC verification program across the CoC supply chain – effectively reaching into the operating scopes of several CB’s in order to sample and verify the integrity of claims.

We see promise in both Options B & C.  In both cases, the verification responsibility is assigned to organizations (CB’s & ASI) with specific expertise and capacity for the task at hand.  This is not a small matter.  In addition, FSC appears to support the use of risk-based metrics in designing and implementing protocols.  This would be essential for either option to effectively and efficiently.

A Way Forward

It is appears that Option F will be politically unacceptable and unlikely to receive serious consideration.

Options A, D, & E primarily represent a desire to cling to the ill-considered dream of implementing the OCP.  Unfortunately, this is unrealistic and very likely to be rejected be a large proportion of the business community.  We have even heard colleagues refer to the OCP as a marketing tool of the PEFC. FSC’s investment in OCP development should be viewed as unrecoverable “sunk costs” and effort focused elsewhere.

Option C offers a mechanism that can be implemented and made to work.  We are concerned, however, that it will be very expensive and complex in practice.  The CB business model is a challenging one.  And CB’s operate – be definition – in a competitive business environment.  The necessary protocols for information-sharing and collaboration are not impossible to work out, but we fear the effort will outweigh the benefit.  And – of course – costs will fall directly on Certificate Holders; effectively reducing the net value of FSC products in the marketplace.

Option B provides the best opportunity for success.  The required protocol for supply-chain verification already lies within the scope of ASI’s contracts with CB’s.  The primary effect of this initiative will be to re-focus ASI’s attention onto the consequential issues in the CoC supply chain.  This is – arguably – what they should be doing now.  There will be costs, of course.  If FSC is serious about making progress in this area (& we think they are), then they should redirect the considerable ongoing investment in the OCP towards this, more practical, effort.  If not, the costs will flow naturally from ASI, to the CB’s, and on to Certificate Holders.  In any event, this option promises to be far more efficient in both effort, cost, and consequence than anything else on the table.

A Final Note

We must return – one more time – to another plea for simplicity.  The only practical way to focus more attention on things that matter is to focus less attention on things that do not.  FSC is challenging itself to strengthen the integrity of the marketplace of FSC-certified products and materials.  The very best way to do this is to simplify the standard.  A cleaner, more focused, and shorter CoC standard is guaranteed to focus the attention of ASI and the CB’s on issues that matter.

CoC should be easy!  It is not too late.