In a sustainability context, traceability means being able to track and verify a product, material, ingredient or component through the supply chain.
|
Quick navigation points throughout the blog
|
|
|
|
|
Supply chain traceability is becoming one of the biggest challenges in supply chain sustainability, as businesses are increasingly expected to understand where their products, materials and ingredients come from. It is not enough for organisations to simply know who their direct suppliers are or where a finished product is manufactured. Customers, regulators, investors and procurement teams are now asking deeper questions such as: where did the raw materials come from, how were they produced, what environmental impact did they carry, and can those claims be evidenced?
This pressure is mounting because many of the biggest environmental impacts come from outside a company’s direct operations. Research from CDP found that upstream Scope 3 emissions from the manufacturing, retail and materials sectors are, on average, 26 times higher than those companies’ operational emissions [1]. The same research also found that businesses are still twice as likely to measure operational emissions as they are to measure supply chain emissions.
This means traceability is becoming central to supply chain sustainability, carbon reduction, product credibility, supplier risk, reporting, regulation and long-term business resilience, as opposed to just being a procurement or compliance issue.
In a sustainability context, traceability means being able to track and verify a product, material, ingredient or component through the supply chain. This first involves following its physical and commercial journey, including its raw material origin, suppliers, production stages, transport routes and chain of custody. Traceability also involves linking that journey to relevant sustainability information, such as embodied carbon, water use, impacts on nature, recycled content, supplier practices, certifications and end-of-life routes.
Figure 1: Supply chain traceability process for product verification.
Traceability is important because sustainability impacts are generated long before a product reaches the organisation selling it. Raw material extraction, land use change, farming practices, manufacturing energy, packaging, logistics and disposal can all sit beyond the walls of the business itself. Without traceability, it becomes difficult to understand the true impact of a product, let alone reduce it.
Traceability is being driven by a mix of regulation, customer expectations, procurement requirements and commercial risk. Businesses are being asked to provide clearer evidence of what they sell, where it comes from and what impact it has.
This is often closely linked to Scope 3 emissions. The Science Based Targets initiative states that value chain emissions, also known as Scope 3 emissions, represent more than 70% of corporate greenhouse gas inventories on average and are part of 96% of validated science-based targets [2]. This makes supplier and product data essential for organisations trying to understand, reduce or credibly report their climate impact.
The regulatory direction is also becoming clearer. The EU’s Ecodesign for Sustainable Products Regulation introduces the Digital Product Passport, described by EUR-Lex as a digital identity card for products, components and materials. Its purpose is to store information that supports sustainability, circularity and legal compliance, making it easier for consumers, manufacturers and authorities to assess product performance [3].
For UK businesses, the Carbon Border Adjustment Mechanism is another example of product evidence becoming more important. The UK Government has confirmed that a UK CBAM will come into force from 1 January 2027 [4]. It will apply to certain imported goods in sectors at risk of carbon leakage, including aluminium, cement, fertilisers, hydrogen, and iron and steel.
Learn more: What sectors are impacted by CBAM?
Although each regulation applies differently, the trajectory is consistent. Businesses are being pushed away from broad sustainability statements and towards verified and evidence-based product information.
Most supply chains are more complicated than they appear because a finished product may contain dozens of materials, each with its own suppliers, processors, transport steps and data gaps. A single ingredient or component may pass through several tiers before it reaches the company selling the final product.
This presents a variety of obstacles due to the inconsistency of supplier data. While some suppliers are capable of providing high-quality product data, certifications, or environmental assessments, others may only provide limited information, outdated documents, or self-declared responses with minimal verification.
Traceability also becomes harder as supply chains scale. For example, a small batch of material may be relatively easy to track, but once materials are aggregated, processed, blended or moved through multiple intermediaries, the chain of custody can become much harder to evidence.
For larger organisations, the volume of data can also become difficult to manage. Traceability can involve supplier details, certificates, geolocation data, emissions factors, product specifications, audit findings and lifecycle information. The MIT State of Supply Chain Sustainability report highlights that supply chain sustainability is now being tracked as a mainstream issue across global supply chains, using surveys, interviews and research to understand how environmental and social sustainability is evolving [5].
There is also a cost challenge because gathering better data, auditing suppliers, commissioning lifecycle assessments, producing Environmental Product Declarations (EPDs), improving systems and training teams all require investment. The commercial value often comes later, through reduced risk, stronger procurement positioning, better reporting and more resilient supplier relationships.
When businesses understand their materials and impacts, they can identify hotspots, reduce waste, improve sourcing, assess supplier risk and make stronger claims about their products. Traceability can help businesses answer practical questions such as where the greatest environmental impacts sit, which suppliers create the most risk, which product changes would make the biggest difference, and which sustainability claims can be confidently substantiated.
This is where traceability becomes commercially valuable. It gives businesses the evidence needed to make informed decisions, not just the paperwork needed to satisfy a request.
It also supports resilience. Businesses that understand their supply chains are better placed to respond to disruption, changing regulation, shifting customer expectations and material availability challenges. If a regulation changes, they know which products may be affected. If a supplier becomes high risk, they know where alternatives may be needed. If customers ask for evidence, they know what can be substantiated.
The importance of product credibility is growing as sustainability claims face greater scrutiny from consumers, regulators and other stakeholders. Sustainability may not be the deciding factor in every purchasing decision, but unclear messaging, vague claims and insufficient supporting evidence can undermine trust and expose businesses to accusations of greenwashing. Traceability helps businesses move away from broad claims such as “sustainable”, “eco-friendly” or “responsibly sourced” and towards clearer, more specific statements.
For example, a business may be able to explain the recycled content of a product, the origin of a key material, the carbon impact of a manufacturing process or the supplier standards behind a product range.
This is particularly important for businesses making green claims. The more specific the claim, the stronger the evidence needs to be. Traceability gives organisations the foundation to communicate with confidence and avoid misleading customers by omission, exaggeration or lack of context.
Material and product passports are likely to become an important part of this conversation. The idea is that instead of sustainability information being scattered across spreadsheets, PDFs, supplier emails and internal systems, key product information is stored in a structured, accessible format.
This could include material composition, repairability, recycled content, carbon data, certifications, safety information, origin data and end-of-life guidance. The EU’s Digital Product Passport approach is an important signal that product data is becoming more central to sustainability, circularity and compliance.
However, a passport is only as useful as the data behind it. If businesses do not have reliable supplier information, product specifications or impact data, a digital system alone will not solve the issue. Traceability depends on both technology and trust.
Complete traceability across all products and suppliers will not occur overnight. Setting priorities is the most efficient method. Products, materials, or suppliers that pose the greatest risk, commercial significance, or regulatory exposure must act as the starting point for businesses.
A useful starting point is to map the supply chain beyond tier one. This means identifying not only direct suppliers, but also the key upstream materials, processes and regions linked to the product. From there, businesses can assess where evidence already exists and where the biggest gaps remain.
Figure 2: Supply chain heatmap analysis of carbon, nature, water and climate risk impacts.
To improve supplier data requests, rather than sending broad questionnaires that suppliers struggle to complete, businesses should ask for specific information. This may include product carbon data, EPDs, recycled content certificates, origin information, responsible sourcing certifications or evidence of environmental management systems.
Traceability is becoming central to sustainability, but it is also one of the hardest areas for businesses to get right. Supply chains are complicated, data is inconsistent, regulations are evolving and customers are asking more detailed questions.
However, the businesses that begin now will be in a stronger position than those that wait until traceability becomes a requirement rather than a differentiator. Organisations can mitigate risk, enhance credibility, and make more informed sustainability decisions by enhancing supplier visibility, product evidence, and material data.
The obstacle involves understanding the implications of that journey for the environment, the customer, the business, and the product.