Marine Stewardship Council MSC Online Transaction Solution (MOTs) Pilot Background Information | June 2015

An overview on the MSC (slide 3) MOTs project background (slide 7) What does the system look like? (slide 14) Benefits (slide 19) Next steps (slide 21) Content overview

Marine Stewardship Council (MSC) Chain of Custody

MSC Chain of Custody program More than 250 certified fisheries More than 2900 Chain of Custody certificate holders CoC certificate holders in over 75 Countries Over 28,000 certified products Around 100 countries selling MSC eco-labelled products Consumer facing retail value of US$4.8 bn FisheryFishery certification Chain of Custody certification Product licensing End product

One step up - one step down traceability Full internal batch traceability Third party audits include mass-balance and traceability test Periodic traceback tests from product back through supply chain Periodic DNA tests, verifying labelled origin MSC Chain of Custody (CoC) program Primary Processor FisheryTraderProcessor Box-in/ box-out distributor Caterer

Drivers for online traceability Industry trends  High degrees of substitution / mislabelling in seafood industry  Growing pressure from consumers for greater traceability Limitations of the current system  Limited visibility into the supply chain  Tracebacks are very manual, time-consuming and not scalable  CoC system never designed to prevent fraud: o Mass balance only conducted for one company o Certifiers have visibility on ‘one step up and one step down’ only  Certifier audits are only a snapshot in time Online reporting as solution  Peers and industry players moving ahead with electronic traceability  Possibilities for more efficient and accurate audits

MSC Online Transaction Solution (MOTs) project background

1.Improve overall supply chain integrity, through: Validation of transactions in the chain Providing certifiers with key information on volumes 2.Where possible, reduce costs of CoC MOTs project objectives

Project timeline Stakeholder concerns raised about risk volume fraud Develop MOTs system Europe pilot (first pilot) China pilot (April – Sep) Decision and full roll-out (Dec)

Pilot with 7 European companies All companies entering data monthly (webform, Excel, or webservices interface) Three companies audited Evaluation meeting pilot companies Fifteen additional companies surveyed First MOTs pilot: Europe 2014

Conclusions first MOTs pilot Impact on business processes o Required time and resources differs, depending on companies admin system o Further work with companies required to minimise company effort and improve user experience Added value to companies o Importance of credibility of the MSC CoC was recognised, a system like MOTs can contribute to this o Limited demand to use the voluntary option on extra traceability information storing, this may change in the future Enhances rigour of audit o Promising, but further testing is needed in different regions

Objectives 1.Test companies are able to use the system with adequate data quality 2.Demonstrate effectiveness of MOTs during a CoC audit Second MOTs pilot: China Aug – Sep 2015

15 Pilot companies 4 MOTs pilot audits in August 400 Transactions in first month China Pilot Progress

What does the MOTs system look like?

Company B Trader Company A Primary Processor MOTs transaction database Centralised database will capture purchase and sale transactions only MOTs overview 50 tons salmon sold (fillets) 50 tons salmon bought (fillets) 30 tons salmon sold (fillets) Mandatory data Date Volume Species Invoice number Customer/ supplier name Company C Secondary processor 30 tons salmon bought (fillets) Fishery 100 tons salmon bought (H&G) Information per transaction 3 methods of data entry: 1.Excel upload 2.Web form 3.API (web services interface) -- for integration with internal systems

Information reported in MOTs Sales and purchase transactions Date Volume Species Invoice number Customer/ supplier name Information not required to report in MOTs XFinancial information XBatch details (not required, but possible if desired) What does this mean for companies?

Brief demonstration of MOTs Volumes of traded species by supplier / customer

Brief demonstration of MOTs - 2 Enter by invoice

Benefits of MOTs

Improve confidence in the CoC system, only genuine certified products are sold as ‘MSC’ Protection of brands and the investments made by fisheries and supply chain partners in MSC certification Reduced costs and effort for MSC CoC certification (i.e. shorten and more focused audits, reduce audit frequency) Increased supply chain visibility with additional traceability information (i.e. catch area, method, vessel number) Benefits for stakeholders

Next steps

Apr – Sep China pilot Jul - Aug China pilot audits Aug - Sep Global stakeholder consultation on: improvements.msc.org improvements.msc.org Sep Closing meeting for China pilot Sep – Dec Finalise business case Jan 2016 Decision on global implementation China pilot 2015 timeline

Project team: Titia Sjenitzer | Carlos Liu | Chelsea Reinhardt For more information, please contact: Thank you.