By James L. Curtis and Meagan Newman

Traceability, according to the June 2014 guide published by the U.N. Global Compact and sustainability advisory firm BSR, means: “The ability to identify and trace the history, distribution, location and application of products, parts and materials, to ensure the reliability of sustainability claims, in the areas of human rights, labor (including health and safety), the environment, and anti-corruption.”

Traceability is undoubtedly important for sustainability purposes.  As we move past the nascent stage of corporate sustainability programs—wherein much of the focus was on the low-hanging fruit of localized environmental initiatives—attention is turning outward and toward supply chains.  As such, traceability has become an important tool for assuring and verifying sustainable supply chains.  Effective traceability tools or “schemes” can ensure that minerals are not sourced from conflict regions, that products are grown in sustainable cultivations, and that human rights are protected.

According to the U.N., by focusing on traceability, businesses achieve sustainability goals and substantiate the claims they make regarding their products.  But there are other benefits as well–risk reduction, improving operational efficiencies, meeting stakeholder demand for more product information, securing supply, and meeting legal requirements.

Currently there are traceability regulations in force for US businesses under Section 1502 of Dodd-Frank and the Lacey Act, and companies are facing an increasing number of lawsuits related to sustainability claims.  The Organisation for Economic Co-operation and Development (OECD) also has guidance regarding due diligence for responsible supply chains, and in the EU there are food traceability requirements and timber regulations.

Whether a company is operating solely in the US or has an international presence, its supply chain more than likely extends beyond the borders of the US.  When considering improvements to sustainability programs or simply contemplating a statement about the environmental or social benefits of its products or services, every company should be thinking about their supply chain—and thinking twice about whether they know what they should know.