The Traceability Divide

Tony’s Chocolonely is a Dutch chocolate company with roughly $150 million in revenue. Since 2012, every cocoa bean they purchase has been digitally traced from the cooperative in Côte d’Ivoire or Ghana through every stage of production. A system called BeanTracker logs each transaction. You can follow a bar of chocolate backward through the supply chain to the people who grew the cocoa.

Mars is the world’s largest candy company. It traces 24% of its cocoa back to farms. Hershey traces less than half. Nestlé traces 49%.

All of them sell chocolate. All of them source from West Africa. All of them have access to the same traceability technology — Tony’s even open-sourced their model, inviting competitors to use it. The smaller company figured this out over a decade ago. The larger ones, with enormously more resources, still can’t tell you where most of their cocoa comes from.

When CBS News found children as young as five harvesting cocoa for Mars in Ghana, a whistleblower revealed that the school attendance records (supposedly proving children weren’t working) had been fabricated. Mars, Hershey, and Nestlé pledged to eradicate child labor from their cocoa supply chains nearly twenty years ago. They still can’t identify the farms.

This is not a technology problem. The technology exists and it’s affordable. It’s not a cost problem (Tony’s is a fraction of the size and figured it out first). It’s not an industry problem. It appears in every sector.

So what separates the companies that can explain themselves from the ones that can’t?

The Luxury Version

In June 2024, Italian prosecutors placed a Dior subsidiary under court administration. The investigation found that handbags retailing at €2,600 were being manufactured by subcontractors for €53. Workers were paid two to three euros per hour. Some slept in the factory. Safety devices had been removed from machines. Workers were undocumented.

LVMH’s CFO told analysts: “We had no idea about this situation.”

Court documents showed that two of the four implicated businesses had direct relationships with an LVMH unit. The Dior subsidiary, investigators found, “did not adopt appropriate measures” to check the actual working conditions of its contractors. This wasn’t happening in a distant country. It was happening in Italy.

Meanwhile, Nudie Jeans, a Swedish company with a fraction of LVMH’s revenue, publishes every supplier address, breaks down production on each product page from raw material to warehouse, and visited 80% of its suppliers across 20 countries in 2024. Customers can see which facility made their garment and the emissions and water used in producing it.

Same industry. Radically different ability to answer the question: how is your product made?

The Consequences Are Accelerating

The divide used to be philosophical. Now it’s financial.

In July 2020, the Sunday Times reported that Boohoo’s Leicester suppliers were paying workers £3.50 per hour. Within 48 hours, Amazon, Asos, Zalando, and Next dropped Boohoo from their platforms. The stock crashed 43%, destroying £1.5 billion in market value in two days. The company, investigators concluded, simply had no idea where its clothes were being made. By 2024, more than fifty investors were seeking over £100 million in damages.

Under the US Uyghur Forced Labor Prevention Act, over 16,000 shipments valued at $3.7 billion have been detained at the border since June 2022. The denial rate for goods from China hit 77% in 2025. The law reverses the burden of proof: companies must demonstrate their supply chain is clean. The question at the border isn’t “are you compliant?” It’s “can you explain?”

The EU’s Corporate Sustainability Due Diligence Directive will require companies to identify and address human rights and environmental impacts across their value chains, with fines up to 3% of global net turnover. Germany’s Supply Chain Act, already in force, can exclude violators from public procurement for up to three years. The EU Deforestation Regulation will require GPS coordinates of production plots.

Apple cut 14 smelters and refiners in 2023 for refusing third-party audits. In 2024, the Science Based Targets initiative removed 239 companies (representing over $4 trillion in market value, including Microsoft, Walmart, Amazon, and Unilever) for failing to validate their climate targets. Fifty-four percent cited supply chain emissions as too complex to address.

Too complex to address. Not too complex to exist. Too complex to explain.

The Divide

The tools are available. Satellite imagery monitors over 20 million hectares of supply chain land. Blockchain traceability is a $1.17 billion market projected to reach $33 billion by 2033. Cloud-based traceability platforms are priced for small and midsize businesses. Fairphone traces 23 materials across its electronics supply chain (including all four conflict minerals) and it’s a tiny company by industry standards.

And yet: only 30% of businesses have supply chain visibility beyond their direct suppliers. Only 2% can see past the second tier. In the fashion industry, the average score on KnowTheChain’s forced labor benchmark is 21 out of 100. In electronics, only 4% of companies traced components to identify suppliers below the first tier.

The companies that can explain themselves (Patagonia, Tony’s, Fairphone, Nudie Jeans) aren’t necessarily larger, richer, or more technologically advanced. Some of them are smaller. Some of them are much smaller.

The companies that can’t explain themselves aren’t hiding something, at least not always. Many of them genuinely don’t know. Their systems were never built to know. And until recently, nobody was asking.

Now everyone is asking. Regulators, insurers, banks, retailers, investors, customs agents. And the answer — “we don’t have visibility past our direct suppliers” — has gone from normal to disqualifying.

What’s structurally different about the companies that can explain themselves? That’s the question I keep circling. It’s not resources. It’s not technology. It’s not willpower.

It’s something about how they were built.