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Implementation of transaction verification in the bamboo supply chain
Confirmation of inaccuracies in the bamboo supply chain will lead to mandatory transaction verification in the second half of 2017

© Michel Gunther

FSC recognises that bamboo is a product of growing importance within the FSC system, and FSC certification for this product is increasing. However, in early 2015 there were allegations of inaccuracies in the bamboo supply chain.

These allegations prompted FSC and ASI to conduct a thorough investigation to determine the extent of the irregularities and to establish whether transaction verification should be required in order to reduce misuse of the FSC system.

What was the outcome?

The investigation by ASI revealed a substantial number of volume mismatches between trading partners in some parts of the supply chain, and FSC determined that there were sufficient grounds to take action. Therefore, transaction verification will be implemented for the bamboo supply chain in the second half of 2017.

Presently bamboo is the only product type and species which has undergone such an investigation and it is therefore also the only product type and species for which transaction verification will be required in 2017. Other product types and species which are currently being investigated are charcoal, white oak, calophyllum and Aucoumea. Depending on the outcomes of those investigations and if it is decided that these product types and species are also high-risk, transaction verification will be expanded to include them in 2018.

What does this mean?

Implementing transaction verification for bamboo as a product type and species means that all FSC-certified bamboo transactions between trading partners in 2017 will have to be verified. Certificate holders will need to share their purchase and sales data for 2017 with FSC and ASI, aiming to fully map the extent of the problem of false claims in the bamboo supply chains.

Certification bodies will then act upon mismatching volumes between companies by issuing Corrective Action Requests (CARs), suspending or terminating certificate holders who allow misleading transactions to enter the FSC system.

How do I know whether the requirement will apply to my business?

All companies asked to perform transaction verification for bamboo related claims will be notified directly by their certification body with clear instructions about timelines and requirements. 

This call to action will be made by certification bodies by the end of June 2017, and must be completed by certificate holders
by 31 July 2017.

Transaction verification in a nutshell

The revised Chain-of-Custody standard (FSC-STD-40-001 V3) has included a new criterion for transaction verification. The intention of this criterion is to ensure that FSC systematically investigates high-risk product types, species and regions, and limits the amount of inaccurate transactions.

Transaction verification is a process of comparing and then verifying all transactions within a specific product type, group or region over a given time period. There are currently four options for verification. The verification can be done via the Online Claims Platform (OCP), where certificate holders will register, connect with suppliers, enter relevant data from their invoice directly to the platform (no financial information required), and the transaction is automatically verified once the suppliers validate their claim.

A second option includes the OCP where the certificate holder will also register, connect with suppliers and enter relevant data from their invoice directly to the platform but verification of transactions is completed by ASI instead of automatically.

Alternatively, a desk audit will allow certificate holders to fill in a downloadable spreadsheet template and send that on to their certification bodies, or they can opt to do an on-site audit where transaction information is collected manually by the auditor for ASI to verify.

It is important to note that regardless of which method is chosen, only bamboo related claims need verification. If a certified company trades in other species and FSC product types, these will not be impacted by the transaction verification requirement. 

METHOD

WORKLOAD FOR
CERTIFIED COMPANY

WHO VERIFIES
THE CLAIMS?

DIRECT COST
RELATED
(RELATIVELY INEXPENSIVE $ -
RELATIVELY EXPENSIVE $$$$)

Upload and approve through FSC Online Claims Platform.

Registration on the
OCP and upload of bamboo related claims and approve or reject transactions entered by business partner.

Business partner through IT platform. Desk verification by
auditor.

No cost.

Upload through FSC Online Claims Platform.

Registration on the OCP and upload of bamboo related claims.

ASI approves or
rejects transactions
entered by business partner.

$$ - ASI to examine
to approve / reject transactions.

Spreadsheet template and desk audit.

Preparation of spreadsheet with bamboo related claims.

ASI will verify claims.

$ - certification body’s time to forward the spreadsheets to ASI.

On-site audit with manual verification performed by auditor.

Allowing auditor access to invoices for FSC and non-FSC sales.

ASI auditor through matching with claims from all bamboo related business partners.

$$$$ - payment of
auditor for onsite audit.