Unveiling the Journey: Digital Product Passports and Improved Traceability

Environment, Business, Science, Technology
 
 
By Daniel Vlahek

Article Summary

  • Digital Product Passports (DPPs) provide detailed product data, improving traceability, sustainability, and second-hand market value across supply chains.
  • DPPs aim to combat ESG issues like greenwashing and child labor by enhancing transparency, especially in high-risk industries like battery production.
  • Key challenges include standardisation, high costs for SMEs, and cybersecurity risks, but DPPs offer long-term benefits in trust and compliance.

In late 2019, the European Green Deal was introduced as a roadmap to create a more prosperous society that is both carbon-neutral and circular.

The strategy was born out of growing concerns about the impact of current economic and consumption patterns, which were driving up global temperatures and disrupting our ecosystems.

To help achieve a climate-neutral, resource-efficient future, the Ecodesign for Sustainable Products Regulation (ESPR) was finalised and took effect in July 2024.

This legislation set out new performance and information requirements - known as ecodesign criteria - aimed at improving energy efficiency, product circularity, and reducing environmental impact.

At the core of this ambitious initiative is the concept of 'DPP,' or Digital Product Passports, which promise to play a key role in transforming how products are designed, used, and reused in a sustainable economy.

 
 
 

What is a Digital Product Passport (DPP)?

When shopping at a supermarket, each product has its own unique barcode that automatically generates the product's price when checking out at the counter.

A DDP acts in a similar way, but goes beyond simple price points; it displays its sustainability credentials in plain view.

Pierre-Nicolas Hurte, CEO of Arianee, says that a DPP means that “users, regulators, resellers will be able to learn everything about the product at any moment of the life cycle”.

Depending on the product type, DPPs can contain information across several key functions, namely:

  • Description of materials and their components
  • Recycled contents
  • Certifications
  • Material provenance and authenticity
  • Environmental footprint
  • Repair instructions

On a systems level, proponents for DPP have argued they can help materialise upstream, downstream and roundstream improvements.

By assigning each material a unique identifier, supply chain participants can gain valuable insights.

This enables them to explore new markets for second-hand applications. For example, by comparing product passports, supply and demand can be more effectively matched, facilitating connections between potential buyers and sellers while minimising transaction costs.

Such is the case with textiles being sold in second-hand retail stores or on online portals. In most instances, second hand garments normally lack information if brand and care labels are missing.

Integration of DPPs are being touted to not only provide product origin information, but also functional and technical specifications (durability, water repellency, and colour fastness) to enhance the second-hand market.

Availability of data can also elicit better recycling outcomes with recyclers knowing what the composition is of a given product.

Such examples can be economic in nature (such as reducing the barriers to dismantle products more efficiently and thereby reducing sampling efforts and operational costs), environmental (material usage cascade, CO2 and water reduction), and social - buyer and consumer appreciation for second-hand goods.

 

Governance and Traceability

With growing investor sentiment on sustainability, backed by increasing (and soon to be integrated) regulation on products, DPPs can begin to address or navigate around systemic ESG problems and geopolitical issues from deforestation, unethical sourcing, greenwashing, and even child labour.

The first product that has been earmarked to integrate DPP into its supply chains is batteries.

A cornerstone of the renewable energy and electric vehicle (EV) markets, batteries are crucial in meeting the world’s increasing energy needs whilst keeping carbon emissions down, in alignment with the Paris Agreement.

Cobalt, a key input in lithium-ion batteries that power cell phones, laptops and EVs, has been linked to illegal child labour practices.

Currently, The Democratic Republic of Congo (DRC) produces over 70% of the worlds cobalt with a large portion of this production happening on unregulated mine sites that employ child labour.

The materials that are mined from these small operations typically get mixed in with large scale operations, thereby making traceability difficult.

By integrating DPPs, supply chains can improve on unsafe and fair labour practices to ensure workforces are not being exploited in the drive to minimise production costs.

 
 
 

Challenges Ahead

As with any emerging technology, ensuring standardisation and interoperability across different industries presents a significant challenge.

Overcoming this challenge requires the development of technology that can seamlessly integrate with existing systems. Due to the scale of DPPs, technology infrastructure will also require significant investment - which can pose a risk of exclusion for small to medium enterprises (SMEs).

Should DPPS become commonplace across the globe, strategies to reduce barriers will need to be designed and implemented.

Inherent to DPPs, data privacy and security are also shown to be major concerns due to storage and sharing of detailed product data.

As highlighted by the World Economic Forum’s ‘Global Risks Report 2024’, cyberattacks constitute a massive risk.

Industries seeking to implement Digital Product Passport technology across their supply chains must prioritize robust data protection measures to safeguard sensitive information from breaches across all vendor networks.

While these challenges are significant, they should not discourage companies from embracing DPP.

In fact, it's inevitable that industries will need to adapt to DPP reforms in the near future.

Instead of viewing these challenges as obstacles, companies should see them as an opportunity to enhance customer trust and confidence.

By leveraging DPP technology to transparently communicate their product's journey, companies can build stronger relationships with their consumers.