The Circular Economy and the Rise of Digital Product Passports
In the era of rapid industrial growth, the pursuit of limitless expansion has become the norm for many businesses. However, this approach is not sustainable in the long run. In light of this, there is a growing need to explore alternative models of production. Enter the circular economy—a concept that has gained significant traction in Europe as a means of embedding sustainability into regulation and leading the charge towards more eco-conscious systems of industry.
Since the introduction of the European Commission’s Circular Economy Action Plan in 2020, substantial progress has been made in this area. Additional proposals, such as the Ecodesign for Sustainable Products Regulation (ESPR), have further solidified the focus on sustainability. At the heart of these regulations and plans is the Digital Product Passport (DPP).
A DPP is a digital record that provides a comprehensive history of a product from its raw material origins to its various ownerships, and even servicing and repair. At each stage of the supply chain and product lifecycle, new information is added to the DPP. This information can be accessed by relevant authorities, owners, and third parties to verify sustainability claims, ensure ethical sourcing, and uphold product quality and authenticity.
While the official approval of DPP regulation by the European Commission is still pending, it is expected to be enforced for industrial and electric vehicle (EV) batteries by 2027, with industry-specific policies rolling out to other sectors by 2030. Businesses that engage in long-term planning should start considering how to deploy DPPs as part of their operations.
From a regulatory standpoint, the exact timeline and industry-specific regulations for adopting DPPs are not yet clearly defined. However, there are numerous benefits to utilizing DPPs irrespective of whether they become mandatory. These passports can reassure customers about sustainability claims, provide better oversight of supply chains, offer a verifiable audit trail for regulators, and more.
It is important to note that DPP implementation will apply to companies of all sizes. While smaller businesses may initially face challenges due to the financial and human investments required, they also have an opportunity to outperform larger competitors by embracing these changes proactively.
Implementing DPPs also entails considering the Ecodesign for Sustainable Products Regulation (ESPR), which sets standards and criteria for environmental performance within the EU. DPPs will be instrumental in verifying compliance with ESPR requirements, including product durability, reusability, upgradability, reparability, carbon footprint, environmental impact, and recycled content.
For example, a DPP can track the “repairability score” of a product, allowing customers to make informed decisions before purchasing. It can also inform buyers about the availability of recyclable and upgradable components to encourage responsible disposal or give products a new life. Additionally, the DPP can showcase how the ESPR has been implemented on a per-product basis, fostering peace of mind.
The proposed regulations surrounding DPPs are still in the development stage, with many details yet to be finalized. However, businesses can prepare in advance by focusing on critical considerations such as data security, transparency, and trust. By leveraging blockchain technology, these vital aspects of DPPs can be simplified and improved. Blockchain ensures the integrity of data by storing a hash of the information, enabling verification and safeguarding against retroactive amendments.
As we approach the mandatory implementation of DPPs, it is crucial to start preparing now. Waiting for all the answers to emerge before taking action may put businesses at a disadvantage. Regardless of the uncertainties, one thing is clear: DPPs represent the future of product accountability and transparency. Blockchain technology, with its unique properties of decentralization, security, and immutability, stands as a promising foundation for this digital evolution. It is our responsibility as businesses to stay informed, proactive, and flexible in order to adapt to these changes. Seeking guidance from experts who understand this landscape can pave the way for a successful transition into the era of DPPs.
