How Digital Product Passport will impact your business and brands

To achieve climate neutrality by 2050 per the European Green Deal, doubling the circularity rate of materials use by 2030, amongst the many more energy efficiency and sustainability goals within Europe and the United Nations, changes are needed at all levels of society and business. The European Commissions Ecodesign for Sustainable Products Regulation (ESPR) proposal has the ambition of making sustainable products the norm, and Digital Product Passport (DPP) plays an important role in achieving that goal. Let’s dive deeper into what it is and what it means for you and your business.

Let’s first cover the Ecodesign for Sustainable Product Regulation (ESPR)

Before we get to covering what the Digital Product Passport (DPP) is we first need to get an understanding of the regulatory framework where DPP is covered. The Ecodesign for Sustainable Product Regulation (ESPR) is a proposed framework from the European Commission with the goal of making sustainable products the norm, it builds upon the existing Ecodesign Directive, which today only covers energy-related products. The current EU energy labels found on consumer products like TVs, light bulbs and some household appliances is direct result of the existing Ecodesign Directive and has for years helped end consumers make more sustainable and informed purchase decisions. And according to the Ecodesign Impact Accounting Overview Report 2020, have reduced the overall annual energy consumption by 10%, compared to a business-as-usual scenario. ESPR has the goal to cover almost all physical products sold in the European market, with exception of food, pet food and medical products where other similar requirements and legislation already exists. The legislature is expected to be passed and put into force early in 2024, with batteries, electronics and textiles being the first product types to be affected. All other product types will be gradually rolled out multiannual until 2030, in order of greatest potential to reduce overall climate and environmental impacts.

What are the Digital Product Passports?

The goal is to harmonise the EU rules for product sustainability and make it easier for companies to operate across the EU, without having the administrative costs involved to be compliant with individual countries sustainability rules that already exists for some industries.

The Digital Product Passports also serves the critical role of providing consumers with information about the environmental sustainability of a product, making it even easier for consumers to make a sustainable and informed purchase decision at the point of sales. The information in the Digital Product Passports will differ depending on the type of product, but will most likely cover large portions of the ESPR regulatory requirements with scoring and information of the following areas:

Resource usage, origins and efficiency of the used resources.
A minimum amount recycled material.
Restrictions of substances that prevents circularity.
Waste prevention or reduction, including packaging.
Environmental and carbon footprints and impact throughout the lifecycle.
Performance, energy efficiency and energy usage.
Durability, reliability, reusability, and upgradability.
Warranty, assembly, installation and other instructions.
Repairability, maintenance, refurbishment, and spare part availability.
Ease of disassembly, recycling, and remanufacturing.
Digital Product Passport (DPP) and other informational requirements.

For complex products consisting of several parts where sourcing, manufacturing, shipping, repairability, maintenance, upgradability, recycling, and a lot of other factors may differ. They will most likely have a unique product passport that can be tracked and maintained up-to-date throughout its entire lifecycle.

While products consisting of a single or very few parts of low complexity might have a more generic product passport, where most of the information will be identical for each product. Differences in produced batches and how they are shipped and reaches the consumer further down the line will still be tracked for the batches or split deliveries. It is likely that some product types will be exempt to track the entire lifecycle once it reaches the point of sales or consumer, but we still have a lot of unanswered questions at this time, and we’ll have to wait and see what level requirements will be put in place for the different product types.

Regarding product labelling, new requirements will also be needed, in some cases with updated energy labels where well established today and deemed effective for consumers and industries, and other times combined or replaced with entirely new ESPR labels.

The fact that more than 90% of EU citizens consider climate change a serious problem according to the EU Climate Change survey (Special Eurobarometer 538, May 2023), is a clear indication that companies need to prioritize product sustainability. The same survey also highlights that consumers believe business and industries are more responsible than individuals in tackling climate change, a 53% vs 35% response.

Abstract icon representing the ecological call to recycle and reuse in the form of a pond with a recycling symbol in the middle of a beautiful untouched jungle. 3d rendering.

How Digital Product Passports affects your industry, business, customer experiences (CX) and tech stacks can be tricky, so feel free to reach out and see how our experts can help you succeed.

Roy Eriksson

PIM Business Development Manager

roy.eriksson@consid.se

+4673 - 035 29 91

Considerations and consequences

The DPP data and your existing product information will (as always) require careful consideration, and as seller you need to be truthful to your customers or run the risk of being accused of greenwashing with severe consequences for your brand value. Vague and inadequately justified environmental claims like “green” or “eco-friendly”, as well as planned obsolescence practices will also be prohibited or more closely monitored to ensure fair business practices.

The ESPR regulations and the Digital Product Passports will over time push manufacturers to change their products, production processes and business models to meet not only the new minimum regulatory requirements, but also react to changed customer behaviours as new sustainability information is made available.

And the forward-looking companies that manage the transition and leverages the opportunities presented will be rewarded with a more empowered brand and market position. New business models and processes improvements may also be in the cards for the companies looking for the next edge, including product-as-a-service, peer-to-peer sharing, on-demand manufacturing, reverse logistics and more.

What ESPR and DPP regulations will be in place for each type of product is governed by the Ecodesign Forum, building on the existing Consultation Forum under the Ecodesign Directive. Where industry leaders, national, enforcement authorities and other stakeholder groups will be present during the key phases of the process.

Many source data points for the Digital Product Passports might be created and maintained in R&D, supply chain and core business systems like ERP, MDM, SCM, PLM/PDM or similar. I also wouldn’t be surprised if we would see systems dedicated to ESRP and DPP for certain industries and products, depending on the regulatory requirements involved. Regardless, you most likely will need to transfer many or all those data points to a PIM or PXM system, that effectively can transform and combine the data with the rest of your product information into a consistent and conversion driving product experience distributed to your sales channels and other systems.

In summary

The aim of the initiatives is that a significant part of all products available to EU consumers by 2030 will be designed to overall be more circular, efficient and sustainable, preferable with more recycled or environmentally sourced raw materials, covered under the Ecodesign for Sustainable Product Regulation (ESPR) regulatory framework. Consumers will through the Digital Product Passports (DPP) have access to the information needed to make a more sustainable and informed purchase decision, as well as follow the product maintenance, reparability, and other information throughout the product lifecycle. The impact of ESPR and DPP will be introduced gradually, with some rules being enforced faster or slower depending on the type of product, legal frameworks and systemic changes. The companies that manage the transition earlier and goes beyond the strict regulatory necessities have the potential for big rewards, as consumers already are and only will increase the importance sustainability and circularity has in their purchase decisions moving forward.

Prototypes and pilot projects

Keep in mind that until the full ESPR and DPP specification is fully decided and approved by the European governing bodies, we don’t know exactly what a Digital Product Passport will contain for each product group, but below are some prototypes and pilots developed by different organizations.

Global Battery Alliance (Battery)

Has launched the first proof-of-concept pilots for a battery digital product passport.

KEEP (Electronics)

A project lead by the Swedish university of Chalmers Industriteknik which has resulted in a prototype Digital Product Passport for electronics.

Trace4Value (Textiles)

An initative lead by RISE and funded by Vinnova that have produced a Data Protocol for textiles.

ProPare (DPP infrastructure)

Is a project by Axfoundation where a protype has been developed showing how a global standardized infrastructure for Digital Product Passports could work in practice.

Other projects and initiatives

CIRPASS

An EU funded project with the goal to prepare the ground for a gradual rollout of DPP for the affected industries, first out are batteries, electronics, and textiles.

GS1

Is actively participating in multiple DPP initiatives, continuously striving for more standardization and alignments between GS1 and DPP for their members.

WBCSD

The World Business Council for Sustainable Development has released 3 reports.

Contact us

Congratulations on reaching this point! By now, you're likely beginning to grasp the significant implications of Digital Product Passports and the impending sustainability regulations for your business. Don't hesitate to get in touch with our team to discover how our experts can assist you in navigating the challenges and opportunities that lie ahead.