Inside Better Cotton's Chain of Custody Standard

In this episode, we delve into the Better Cotton Chain of Custody Standard that has been in effect since October 1st, 2023. We'll explore its traceability models, discuss the implications for suppliers, producers, and manufacturers, and provide insights on how organizations can align with and become part of this standard.

Speakers:

Tom Owen, Head of Certification at Better Cotton Organization
Nellie Cunningham, Global Program Manager for Textile Exchange & GOTS at Intertek Business Assurance

Natalia Farina 0:05 – 1:53
Hello and welcome to Intertek’s Assurance in Action podcast! My name is Natalia Farina, I’m the Global Marketing Manager for Business Assurance with Intertek, and I’ll be your host for this episode.

Today, I am sitting with our guest speaker, Tom Owen, Head of Certification at Better Cotton organization. Tom oversees all the Chain of Custody standard and any possible integrity issues. Tom has about 16 years of experience in food safety and sustainability certification programs.

Also, we have Nellie Cunningham, Global Program Manager for Textile Exchange & GOTS with Intertek. Nellie has been managing Textile Exchange and GOTS standards for almost 2 years. Previously, she has worked as a Change Management and Training Manager covering and supporting a wide range of quality and global social compliance standards for almost 7 years here at Intertek Business Assurance. Thank you both for joining me today.

So, today, we will discuss the new Better Cotton Chain of Custody Standard that has been in effect since October 1st, 2023. We'll explore its traceability models, its implications for suppliers, producers, and manufacturers, and how organizations can become part of this standard.

To get started, Tom, could you please give us an overview of the Better Cotton organization? Also, could you explain why the term "Better" is used in Better Cotton and how Better Cotton is transforming the cotton industry in terms of sustainability?

Tom Owen 1:54 – 2:48
Sure, Natalia, thank you very much for the question and thanks for inviting me here today. So, just to give you an overview of this, I mean, at Better Cotton our mission is to help cotton communities survive and thrive while protecting and restoring the environment.
We recognize the size of the challenge, that it's a huge thing for us to undertake, but the environment is in danger; climate change is a tipping point, and the majority of cotton farmers and farm workers are in some of the world's poorest, worst affected countries.
So, at Better Cotton we are trying to meet this challenge head on.
So, along with our extensive network of partners and members, we are making cotton farming a more climate resilient, environmentally friendly and responsible business.
Already we have nearly 1/4 of the world's cotton produced under the Better Cotton standard, which is a system and a set of principles designed to deliver just that. So, our holistic, farm-level approach to improving cotton production is the key and I guess this is where we come when we thing about of the world better.

Natalia Farina 2:48 – 2:56

Absolutely. Nellie, can you explain what Intertek's partnership with Better Cotton means for the industry?

Nellie Cunningham 2:57 – 3:46

Yes, sure, Natalia, thanks for having me here. By the way, that’s a good question. Intertek has always been a total quality assurance provider and as a company we’ve always been committed to promoting and enhancing sustainability, ethical sourcing, traceability and supporting global and local industries, reach their sustainability goals. When Intertek was approved as a 3rd party verifier for Better Cotton’s Chain of Custody standard, it highlighted this commitment. Another opportunity for Intertek to support Better Cotton and all actors in the supply chain when it comes to providing our science-based and forward-thinking auditing experience and assisting customers meet the highest standards of traceable cotton in alignment to Better Cotton’s Chain of Custody standard.

Natalia Farina 3:47 – 4:05

Thanks, Nellie. Tom, can you tell us more about the Chain of Custody Standard and the traceability models it introduces? Also, what was the compelling reason behind Better Cotton's decision to venture into traceability?

Tom Owen 4:06 – 6:18

Sure, no problem, happy to answer that one. Better Cotton was founded with a clear vision of making sustainable practices in cotton production the norm around the world. But we appreciated that we needed to look it in certain ways to make to make such a big impact, so scaling our programme quickly was key. With that in mind, we created a Chain of Custody (CoC) framework that incorporates the concept of “Mass Balance” – a widely-used volume-tracking system that allows Better Cotton to be substituted or mixed with conventional cotton provided equivalent volumes are sourced as Better Cotton.

However, with changes in the legislative landscape and demands from brands and consumers to try to understand the origins of their products we understood there was a need for us to shift our thinking and adapt to facilitate traceability. There has been a team dedicated to doing just this within Better Cotton, to bring this project to fruition and has been supported by the whole of Better Cotton and multiple stakeholders, both internal and external. So, the main four things that we've done just try to support this change is we've developed in new chain of custody standard, and this includes some of the physical models you referenced earlier. So, we allow for controlled blending, we allow for segregating multi-country which is where you are allowed to handle Better Cotton from multiple countries, but it has to be Better Cotton and we have a model which is segregation single country which is where you have to handle the Better Cotton from a specific country.
We have enhanced our digital platform to handle such transactions and I'll talk a bit more about this later on.
We've updated our supply chain assurance processes, so try to make sure that we have a credible system in place and we are developing a new claims framework.

With respect to where the standard applies, so the chain of custody standard applies from post-farm gate activities, which in the cotton industry effectively means from the ginner onwards and the new chain of custody models help to focus organizations on how they handle it, while the cotton types and as I mentioned, this can be done by country or based on the fact that it is better cotton only.

Natalia Farina 6:19 - 6:42
So, one of the common questions we receive is: Better Cotton's Chain of Custody Standard? What are the benefits and opportunities it brings to organizations? So, in short, what value does it provide and is being verified to the CoC Standard globally recognized?

Tom Owen 6:43 – 7:39
Yeah, that's a very good question.
I mean, we are very, I guess, cost aware at Better Cotton and we're very aware of the audit and assessment burden.
So we've had to think about this very hard when we've developed our process.
So, the two main areas that I would say are the benefits to organizations that follow this standard have become verified are the fact that one, it supports our overall mission to help cotton communities survive and thrive because without a chain of custody and supply chain to source the cotton, there would be no funding that we'd be able to get to the farm level and make the impacts that we see there.
And then I guess the second point which links to your part about whether we are globally recognized, it's the fact that the scale of the better cotton program and as I've mentioned around quarter of the cotton grown globally is better cotton. Better Cotton therefore is a big part of sourcing programs for many of the largest retailers and brands.
And so to be able to source and to sell better, cotton gives a big advantage to those suppliers in the market.

Nellie Cunningham 7:40 – 8:15
And I just wanted to add also that this is a really great step that Better cotton is venturing into on the traceability part. It's also not just allowing organizations to understand where the cotton is coming from, but in terms of regulatory compliance, it sets the company one step further.
We know, for example, that the EU and you know United Nations have set in place traceability and regulatory policies and textiles and more pressures are placed on organizations to comply with them, so it's also being prepared in a sense.

Natalia Farina 8:16 – 8:24
Yeah, absolutely. So, how important is verification and or certification when it comes to sustainability and traceability claims?

Nellie Cunningham 8:25 – 10:08
Yeah, so first of all, we know that there has been again a lot going on with regards to the EU regulations related to textile sustainability and traceability.
For example, we have the EU’s digital product passport, which is a tool essentially to digitally record a product sustainability and circularity information.
The Ajax law in France, which mandates brands to make available to consumer data such as the path of followed by the product during its manufacture and production, and many more, which the EU and UN have set in place.
So again, more pressures are placed on organizations to comply with them as well.
And all these laws and regulations are pointing for greater need for traceability with regards to sustainability and when it comes to sustainability and traceability, you cannot remove verification and certification on this equation if we are to know if the product is really sustainable. It's all interconnected.
So what I mean by this is to ensure that those sustainability claims that brands, retailers and any actors in the supply chain are credible and true.
That whatever is happening on the ground or on the sites are actually what is happening and in order to trace the flow of where the product is coming from the farm up to the consumer, it is important to look for an independent third party organization to independently or autonomously look at the system.
The processes against the standard criteria requirements for an impartial verification, and if indeed the claim is backed up by evidences and meets the standard criteria.

Natalia Farina 10:09 – 10:36
Yeah, it's great that there are options for Better Cotton customers regarding traceability models. But I have a follow-up question: given your success with Mass Balance, in what ways are the new traceability models 'better,' if that's the right term to use? And, what would be the best model for an organization to choose?

Tom Owen 10:38 – 11:45
Yeah, I can take that one up.
I don't think I'd describe the models as better necessarily.
They just the different approach within the supply chain.
So as I've mentioned previously in some of the earlier questions, the mass balance model has been extremely successful in allowing our program to scale and acting, as you know, very good sourcing programs for retailers and brands.
And we don't see that disappearing any time soon. In terms of the types of models that would be beneficial to companies, I think it's very much going to depend on what their customers want and also where they're able to source from.
We have, as I said, we have our single country, our multi-country better cotton, which is where it's all better cotton product and we also have our control blending model, which may be is more applicable to the realities of the market whereby different types of cotton to being blended.

With traceability it does have the benefits of outlined earlier and there is a growing demand and I suppose the main kind of plus point of traceability is that it gives greater confidence to retailers, to brands and to consumers about knowing where they're cutting is coming from.

Natalia Farina 11:46 – 12:09
Yeah. So, what types of cotton are covered in the CoC program? Also, what happens if an organization that buys and sells Better Cotton chooses not to be part of the CoC Standard? What are the implications for them?

Tom Owen 12:10 – 13:20
OK, I'm as I've mentioned earlier, the chain of custody typically starts at the post-farm gate.
So with ginners that receive seed cotton from producers, so that's where the whole chain of custody from a better cotton perspective starts.
It's then converted to lint, spun into yarn until it eventually reaches the final product stage and into the form that people you would typically see in your shops or your retail stores.
We don't currently cover by products or waste products within the scope of the standard, but it is something we've been asked to consider because many of the products used in the retail stores and from some of the big retailers and brands, particularly around their home where products use things like common oils.
So this is an area we are exploring and to see how we can apply traceability in this space as well.
To your question on what happens if people don't want to get involved, well, all of our transactions are handled on our digital platform.
So if a company does not wish to be part of the chain of custody standard, then they can still adhere to our channel custody guidelines up until May next year.
But after that they would not be a part of our program and they couldn't source or sell on as better cotton, and this links with our digital platform and also known as the BCP.

Natalia Farina 13:21 – 13:28
Alright. And can you tell us more about the better cotton platform and its connection with the chain of custody standard?

Tom Owen 13:30 – 14:44
Absolutely, sorry, I used the acronym earlier, which is something I think we're all quite guilty of in the sort of certification space.
But the better cotton platform or the BCP as I referred to it earlier is an online system used only by better cotton and registered supply chain organisations that buy, sell or source better cotton or cotton containing products as better cotton.
So we've had this for many years now and the aim of the platform is to act as an online database where supply chain actors can enter and monitor transactions for their mass balance transactions and or their physical or traceable, better cotton.
This we see as one of the unique selling points of better cotton in the fact that we can verify the volumes of better cotton source in the supply chain and we can reconcile all volumes of the Cotton that's flowing through there.
All users of the BCP are required to follow the chain of custody standard and any failures to adhere to the standards can resolve in an organization being blocked from entering transactions.
So it's incredibly important that organizations are adhering to our standards at all time, and then the chain of custody and associated normative documents also include requirements on how organisations are expected to interact with the BCP.
So what type of data they're supposed to enter and the timelines with which they have to adhere to with respect to the platform.

Natalia Farina 14:46 – 15:01
That's great. What are the steps for onboarding organizations new to this standard? And, for existing Better Cotton suppliers, how can they transition to the CoC Standard?

Tom Owen 15:03 – 16:51
Sure.
So, we have a lot of materials available on our website that will help people with this, but the main steps are that we need everybody to have a BCP or a better cotton platform account because this gives the organization a unique identification number and that helps us then track that organization throughout the process.
The second part of the process says, is to review complete and submit our registration form, which is a relatively short form of around 20 questions that we require all organizations to submit to us.
Our better cotton team and we have our dedicated compliance desk team will then review this submission and check for eligibility to join our program.
They'll check for completeness and they will also assign a risk category based on some of the information and the answers given to us.
Depending on the category, we have categories A, B and C, you may also then need to have an audit or assessment by an organization such as Intertek. After the assessment or after the completion of the registration process, the organization will be sent a training link to an online course, and this online course, again is a relatively short interactive course and the main focus is around how companies need to interact with the BCP.
Now they're the kind of main steps, obviously for an existing organization that wants to transition, there are other things that organizations need to do, so things like reviewing your documents and preparing for the new standard, make sure people review the standard thoroughly so that you understand all of the requirements.
There are various training courses, so our teams offer training courses and webinars on the requirements and on how you can transition to the standard.
And we also have dedicated in country teams who can help organizations support with that transition.

Natalia Farina 16:52 – 17:09
Alright, thanks for walking us through the onboarding steps, Tom. So, in terms of verification or assessment, Nellie, how frequently does an organization need to be audited for the CoC programme?

Nellie Cunningham 17:10 – 18:13
Yeah. Great question.
I'm so better cotton actually has laid out a very clear frequency or assessment cycle, depending on the risk level for which the organization has been granted by better cotton.
So this is determined by a Risk level A, B or C – low risk, medium risk and high risk, respectively. If the organization has been granted a Low Risk (Category A), for the first 2 years - no audit is required, but on the 3rd year an audit is required. For Medium risk, the audit starts on the 2nd year. For High risk, the onsite assessment will happen in the first year.

The assessment cycle has nothing to do with the sites membership, by the way.
The cycle applies to the first time the organization joins the new standard.
So for example, if the company was granted a category C which is high risk even if the organization has been a member for three or more years, they will need an assessment on year one before they can be onboarded to the new standard.

Tom Owen 18:14 – 18:56
Yeah, that's right, Nellie, and thank you for the clear description there.
I just want to add that also in some cases better cotton has the right to amend the category based on various factors and if there are certain pieces of information that we receive.
For example, if a company or supplier is involved in an incident, or if there are risks identified, then it's perfectly possible we would change the category allocated to that particular company. And then something I was talking to Nellie about before we started this podcast is that we are also looking at a transition to a more formal certification program with a greater emphasis on the use of third-party certification bodies or verifiers, and that may have some implications on when and how often organisations need to be audited or assessed. And we will be communicating that to all relatively soon.

Natalia Farina 18:57 – 19:23
That that's great to know. So, Nellie, the auditing process is a new aspect of the chain of custody program and for some organization the term “audit” can be quite overwhelming.
What tips or best practice can you share to help organizations to prepare for the chain of custody verification process and make it less stressful?

Nellie Cunningham 19:24 – 23:12
Yeah, so first of all, it is a common perception for organizations, you know, to have some sort of apprehension when the word “audit” is brought up. Perhaps because an audit needs attention to detail and understanding of the organization's controls and endless paperwork, right. And too often, I think auditing is perceived as auditors trying to find problems like the bad cop sort of thing.
However, these perception is far from the truth in that it actually prevents issues through risk assessment, internal controls and processes, and we need audits to bring about continual improvement and assurance for further growth of the company.
So really there are a normal part of operating as an organization.
The good thing is that with Intertek as a partner when it comes to auditing, we have a value added audit process to assist organizations, you know, make it as smooth as possible, and this includes support prior to the audit itself during the audit and post-audit activities.
Our goal is to ensure that an organization is functioning the best it possibly can and an Intertek auditor's job is to help them establish just that.
And in the case of Better Cotton chain of custody standard before you can buy or sell physical better cotton, you will need to have passed an assessment by an approved third party verifier or certification body such as Intertek.
Of course, as with any audit, preparation is key and so first of all, it is crucial that an organization fully understands the requirements set out by Better Cotton for the CoC verification.
Better cotton provides, you know, complete guidance documents, what Tom has already mentioned, to support the consistent application of the CoC standard and these resources you know, such as Better Cotton Chain of Custody (CoC) Standard document, the Implementation Guidance for Suppliers & Manufacturers, for Ginners and for Traders and Distributors provide organizations knowledge of what will be checked during the audit such as you know the company's record keeping, the management system, purchasing, material receipts, storage and production, sales and goods movement, volume reconciliation and so on.
There are again, as what Tom said, there are also trainings provided by them to help organizations really fully understand these requirements, and we suggest that organizations utilize those before agreeing to an audit schedule with us.
Another thing is that it's also very important to have a system and process in place.
You know, like how you collect the data to check the movement of the products, it should be easily available.
The cooperation of the team is also key.
You would need to work together to be able to provide any data and evidence of the traceability of your products, and that also means cooperation, for you know from your HR, sustainability teams and procurement teams.
Of course, the top management support is also key when it comes to these kinds of audits as well.
Another suggestion is that as early as three weeks or two months, you can reach out to us to complete any commercial agreement and prepare and schedule the assessment.
And, also, in case there is a nonconformity that will be found, you know address the corrective action within the time limits set out by better cotton in order to not delay the CAP reports which are auditor will provide and you know further also to not delay the assessment result from either better cotton or Intertek.
So these are the key suggestions and tips I guess that we can share to ensure that the organization is getting the most value, you know, from their audit with us.

Natalia Farina 23:12 – 23:20
Perfect, thanks for sharing the tips, Nellie!
Tom, do you have any final thoughts or tips for our listeners?

Tom Owen 23:20 – 23:54
I think I would just very much echo what Nellie has already said, to be honest with you.
I think one of the big things actually is one of the first points Nellie made is around the mindset towards an audit or an assessment is for people to see it as a as an opportunity to continually improve.
And then I think it's the same as anything else that is new or different to you in life.
Make sure you prepare yourselves, attend one of the many training sessions we have available and really don't hesitate to ask questions, you know, our teams are there to support people through this transition.
We understand it's a it can be a big change for organizations, so we're very happy to help.

Natalia Farina 23:54 – 24:28
Absolutely, thank you both, Tom and Nellie, for sharing your expertise and valuable insights into Better Cotton's Chain of Custody Standard and traceability models. To all our listeners, if you have any further questions or want to learn more about the Better Cotton CoC Standard, please reach out to business.assurance@intertek.com. Stay tuned for our next episode, where we’ll continue to bring you the latest industry trends. Until next time. By for now!

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Inside Better Cotton's Chain of Custody Standard

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