Better Cotton CoC Standard FAQ | What are the contents to know during the transition period?

Chain of Custody (CoC) refers to a documented flow path. Specifically, by keeping complete document records, the entire process of product traceability and verification is carried out from being licensed as a better cotton farmer to being sold as better cotton.

Q: At the latest, when is it necessary to follow the CoC standard version 1.0?

May 2025.

Q: What is the difference between the current model and the traceable origin of better cotton orders in registration operations?

At present, everyone operates on inventory balance orders, which can be replaced and mixed during the production and storage process. The main focus is on inventory management and purchase sales balance of BCCUs on the BCP platform, without the need for production declaration or uploading transaction files.

Traceable and better cotton orders focus on the transparency and traceability of the supply chain, including the separation of storage and production processes. Production declarations need to be made, transaction documents need to be uploaded, and attention should be paid to the BCP platform's physical better cotton inventory management and purchase sales balance, which has higher requirements for the enterprise management system. The transaction names on the document must match those on the BCP.

Q: Who will conduct the annual review?

The annual review includes annual self-assessment and annual management review.

Self evaluation can be conducted by internal employees or external consultants or organizations hired by the company. If it is an internal audit of personnel in various positions within the enterprise, it is necessary to ensure independence from the activities/processes being audited. For example, people in the finance department may review the processes of the production department.

Management review is the inspection by the company's management of the company's compliance with better cotton regulatory chain standards.

Q: Are subcontractors subject to management?

Yes, while maintaining legal ownership of goods, enterprises should keep the latest list of all subcontractors involved in subcontracting business, provide sufficient information and training to subcontractors, sign agreements with each subcontractor, clarify responsibilities and rights, and subcontractors cannot log in to the enterprise's BCP account.

Q: How to fill out a self-assessment when a trading company has no storage space?

Self evaluation is based on the compliance of the template provided by Better Cotton with applicable requirements, such as excluding storage and production related requirements.

Q: After the implementation of the new regulatory chain, do upstream and downstream enterprises need to meet the new regulatory chain standards?

Yes. For downstream enterprises (such as clothing factories), if they receive physical better cotton orders from customers, their upstream suppliers also need to follow the new standards and obtain qualifications to operate traceable good cotton orders in order to provide you with physical better cotton products. Even if your company follows the Chain of Custody standard, if the supplier follows the Chain of Custody Principle version 1.4, it will not be possible to successfully deliver traceable better cotton orders to the end brand.

Starting from the end of May 2025, no matter what kind of order, it is necessary to follow the new standards. At that time, the 1.4 version of the Chain of Custody Principles will be abolished.

Q: Regarding the audit of subcontractors, for example, both A and B companies consider C as a subcontractor. In the process of auditing A, subcontractor C has already been audited and the results have been positive. Therefore, when auditing B, do we still need to repeat the audit of subcontractor C?

There is a possibility of further review, which can be divided into two situations:

1) If the subcontractor has obtained independent verification (i.e. it has also received better cotton orders), then they do not need to audit again.

2) If acting solely as a subcontractor, the subcontractor does not necessarily need to conduct an audit unless the risk is evident. In this case, because there is no clear way to identify which clients they are collaborating with and whether they have been previously audited, there is no guarantee that they will not need to be audited again in the future.

Q: If a successful registration results in a B-class result but no physical better cotton order is received within one year, can the enterprise not arrange third-party evaluation and return to the inventory balance order that follows the chain of supervision principle version 1.4?

Once the enterprise completes the registration of the new standard, it cannot go back to the previous version 1.4 requirements. In this case, the enterprise may need to conduct an audit of inventory orders in accordance with the requirements of the regulatory chain standards. This audit may be conducted remotely or by the Better Cotton Compliance team themselves.

Q: Has it been audited within 3 years according to the new evaluation process, even though it has been included in the physical better and better cotton project with only inventory orders?

After following the new chain of custody standards, if there are only inventory orders, they also need to be reviewed according to the requirements of the chain of custody standards for inventory orders.

During the 3-year evaluation period, the audit may only need to be conducted once and may be conducted remotely. This is because for inventory balance orders, compliance with standard requirements is mainly evaluated by reviewing relevant supporting documents.