Chain of custody offers a new approach to the international trade in secondary raw materials and soft commodities where compliance requires evidence of its source and end-point.
What is chain of custody?
A chain of custody (CoC) is essentially a paper-trail – digital or otherwise – that documents what is being shipped, where it originated, where it is, and who’s in charge of it, every step of the way. In the case of a commodity, this typically includes details of the material in question, such as its grade, quality, quantity and provenance; information on participants; and details about when, where and how the shipment changes hands. Documenting where the shipment ends up, and where it came from, is particularly important for transboundary movements of hazardous waste, for example.
Chain of custody examples
In the past, chains of custody have been used to govern the movement of everything from scientific samples to criminal evidence – basically any situation where it’s important that the contents of a shipment are not altered or inaccurately described. In the timber trade, customers want evidence that their goods have been sustainably sourced. So they set up a credible certification scheme backed by chain of custody principles.
Traditional chains of custody mostly used paper documents and wet signatures, but digital signatures and smart contracts are now putting the benefits of the chain of custody approach within the reach of many industries where traceability and verification are required.
Digital waste tracking
The UK government is supposed to be introducing mandatory digital waste tracking in April 2025, replacing paper-based documentation with a unified digital database, enshrining chain of custody principles in the rules that govern the UK waste trade. Worldwide, governments and port authorities are beginning to embrace live data-sharing, especially in the field of compliance. Legislation in the UK and Singapore already enables electronic bills of lading, which represents another step towards a global CoC network.
Commercial benefits of chains of custody
Because chains of custody have rules that all participants need to agree on, they help to determine who takes the blame in the event of a dispute or claim. A CoC also deters participants from making unsubstantiated claims for compensation or refunds – because the digital paper trail is there for all to see. A digital chain of custody solution provides opportunities to drive greater transparency, trust and growth in both waste and soft commodities trading, for example, where provenance is key.
Recent legislation enabling CoC
The UK Electronic Trade Documents Act, which came into force on 20 September 2023, puts digital documents such as electronic bills of lading (EBOL) on the same legal footing as paper originals. The United States is also tabling proposals to amend its Uniform Commercial Code (UCC) to enable digital documentation.
ISO standard 22095
The growing need for a broader set of standards to govern chain of custody systems has resulted in the creation of chain of custody ISO standard 22095. It contains 32 pages of text and diagrams that provide unambiguous definitions of different chain of custody models, and the corresponding requirements, which are independent of sectors, materials, products and issues addressed. Circularise provide a useful overview of the four main types of chain of custody.
