In today's rapidly evolving regulatory landscape, businesses are being pressed to answer fundamental questions: Where do your materials come from? Can you demonstrate that your goods are sustainable, legal and responsibly sourced?

These are no longer niche sustainability concerns. They sit at the heart of risk management, compliance, brand integrity and, increasingly, a company's licence to operate. Two aspects are fast becoming non-negotiable: traceability and chain of custody.

Josh Taylor, ISEAL's Traceability Manager, explains why traceability matters more than ever and how systems are evolving to meet new demands.

Traceability: the backbone of responsible business

Traceability is often described as simply tracking a product from point A to B. In reality, there's far more to it: understanding where raw materials come from, who produces and trades them, and how they move through the supply chain.

An example comes from the food sector. When a group of consumers is hospitalised with salmonella and investigators trace the issue back to the same salad from the same store, the ability to identify the producer and where the contamination occurred is critical. That's only possible with proper traceability.

Beyond crisis response, traceability reduces waste, improves procurement decisions, and strengthens overall operational performance. It also provides the granular insight companies need to meet fast-evolving ESG expectations. And critically, it's essential for compliance as governments introduce new requirements on deforestation, forced labour, and sustainability reporting.

Turning traceability into trust

If traceability provides the visibility, chain of custody (CoC) provides the evidence.

A CoC system tracks materials through the supply chain – from production to end market – while preserving the integrity of any claims made about them. It monitors inputs, outputs and relevant attributes as they move through a certified system.

CoC underpins credible sustainability claims, verifies that certified goods meet their stated criteria, and supplies the documentation needed for regulations such as the EU Deforestation Regulation (EUDR). In short, it turns traceability into verifiable proof – something regulators, investors and increasingly consumers demand. As supply chains become more complex and regulation tightens, interest in CoC has surged. In response, ISEAL has updated its Chain of Custody Models and Definitions Guidance to clarify commonly misunderstood concepts, align terminology with ISO standards, and bring greater coherence across sectors that often use different language for similar processes.

What makes traceability and chain of custody credible

Chain of custody is closely tied to ISEAL's credibility principles, which outline what makes a sustainability system trustworthy and effective. As sustainability systems develop chain of custody frameworks, it's important that all the actors who will use them are involved, so the system is practical, implementable and fit for purpose. If these actors are not involved in shaping the system, it may look sound in theory but fail in practice.

For CoC to function well, it must be practical, workable and able to deliver value — whether by improving traceability, reducing risks or opening access to new markets. This is important, as participating in CoC adds extra responsibilities for suppliers and buyers, they need to see the clear benefits in return. Further, credibility also rests on the quality of the information the system produces. Transparency, reliability and truthfulness are essential because they enable companies, regulators and consumers to trust the claims attached to certified goods.

The evolving role of chain of custody in GHG accounting

In practice, CoC can serve several purposes, and one growing area of interest is its use in supporting corporate GHG accounting and reporting.

As emissions standards evolve, particularly those covering land-sector emissions and removals, CoC systems are playing a growing role in validating what companies can include in their Scope 1, 2 and 3 inventories.

Models that maintain physical traceability, such as segregation or controlled blending, can often be counted directly. Certain mass balance approaches, especially at batch or site level, are now recognised under the GHG Protocol's Land Sector and Removals Guidance. This shift is prompting companies to adopt established CoC frameworks rather than build custom emissions-tracking systems. This shift is prompting companies to adopt established CoC frameworks rather than build custom emissions-tracking systems.

ln short, climate reporting, is accelerating the case for robust CoC.

The future is digital

Many sustainability systems already use online platforms to track certified volumes. For example, Better Cotton has a platform that allows you to track, on aggregate, the volumes of material purchased and the volumes sold. The ability to control and monitor volumes is fundamental across all chain of custody systems. Similarly, RSPO, Rainforest Alliances, Fair Trade, Sustainable Biomass Program, they have well-established systems for tracking material flow. As technology continues to advance and become more accessible, these systems are becoming increasingly robust and easier to use.

The next technological wave promises more granular data, lower participation barriers and automated integrity checks. AI will increasingly help to detect anomalies and prevent fraud, making systems more scalable and secure. Companies that embrace these technologies early will be better equipped to navigate regulatory complexity and meet rising expectations from investors, regulators and consumers.

The remaining challenges of chain of custody and what the future holds

Chain of custody is powerful but not foolproof. On its own, it cannot deliver all the information needed for comprehensive due diligence, particularly on issues such as forced labour.  

Supply chains remain sprawling and opaque, and even the best systems cannot guarantee perfect accuracy. Continuous monitoring, strong feedback loops, and ongoing improvement therefore remain essential. CoC should be seen as a foundation, reinforced with better data, stronger governance, and clearer accountability.

Looking ahead, traceability and CoC are no longer back-office functions. They are strategic levers that shape reputation, reduce risk, enable compliance, and build trust with consumers and regulators.  

As supply chains lengthen and scrutiny increases, transparency won't just be expected – it will be a competitive advantage.