EU Digital Product Passport: how it affects companies and first steps to implement it

In March 2022, the European Commission proposed a package of measures within the framework of the European Green Deal and Circular Economy Action Plan. The legislative package aims to make most goods sold in the European Union more sustainable. Part of the proposal for the Ecodesign for Sustainable Products Regulation (ESPR) is the introduction of a ‘Digital Product Passport’.

The ESPR defines this passport in order to accelerate the transition to a circular economy, and therefore improve energy and material efficiency, extend the useful life of products and optimise their use. Products must have a passport in order to be sold in the EU, regardless of whether they are manufactured inside or outside it, which implies a challenge for companies, who must adapt. In this article, we’ll analyse the impact of this measure on European sustainability and how changes should be addressed. 

Digital Product Passports: what are (and what aren't) they?

Officially known as a Digital Product Passport (DPP), this interactive digital profile collects detailed information about a product and its supply chain. The DPP aims to improve the transparency, material traceability, data exchange and sustainability of products throughout their life cycle. 

Digital passports go beyond simple identification or certification. They are designed to document the environmental impact and sustainability credentials of a product, from its creation to the end of its useful life, and communicate that information to interested parties, including the consumer, so that they can make well-informed purchasing decisions.

They are different from other digital documentation tools and systems that, while also important for traceability, fulfil different functions and even serve as support for the digital passport. We’re referring to digital twins, physical labels or passports, bar codes or QR codes, product certificates and eco labels, material databases, guarantees and product manuals, among others.

The DPP will provide a wide range of information, including general information about the product, such as weight or where and when it was manufactured. It will detail the materials used and their origin, the carbon footprint and relevant information about warranty, maintenance, spare parts or reuse and recycling guidelines.

Passports for batteries, textiles and electronics first

The European Commission’s goal is to lay the groundwork for the phased introduction of digital product passports for various groups of physical goods. Initially, the regulatory specifications were expected to be published in 2024, but there are still unanswered questions and uncertainties for those who will eventually have to implement the tool.

Batteries are the first group of products for which the EC has developed a digital passport proposal in line with the ESPR’s requirements. Starting in 2027, all batteries for industrial and electric vehicles must have a battery passport. The implementation of the DPP in this value chain is defined by Regulation 2023/1542 concerning batteries and waste batteries.

In addition, the new regulation will be extended to other product categories in key markets due to their impact on the environment and their high potential for circularity, including textiles and the construction and electronic waste sectors. It is expected that the ESPR regulations will come into force in 2026/27 and that most products will be covered by 2030. 

Digital Passport: bureaucracy or opportunity?

DPPs are an initiative to support sustainable production, circular business models and informed decision-making. This official passport ‘will provide information about products' environmental sustainability. It will help consumers and businesses to make informed choices when purchasing products and help public authorities to better perform checks and controls’,  the EC points out.

As far as companies are concerned, opportunities will arise from greater customer confidence through quantifiable and reliable figures. According to data published in the Global Consumer Insights Pulse Survey 2023 by PwC, more than 70% of consumers say they are willing to pay more for sustainable goods and those manufactured by companies known for their ethics and transparency.

Brands will have the ability to back up their ecological claims to avoid accusations of greenwashing. They will be able to create value and unlock new sources of income by implementing circularity-oriented business models. The DPP can be a tool to improve reputation, gain a competitive advantage and comply with European standards, verifying compliance with legal obligations.

What now?

Digital passports are essential for boosting the circular economy and can represent a potential benefit for companies as a tool to meet their supply chain reporting obligations, such as GHG emissions or life-cycle assessments. Implementing it could be a costly, time-consuming task that might hinder a business. However, innovation gives supply chain actors the opportunity to explore new ways to grow and differentiate themselves.

Companies that have not yet implemented a digital passport system should start planning how to manage it within their value chain. The first step will be to create an effective DPP strategy based on regulatory research and a clear view of the impact of the existing supply chain. It's also vital to work closely with suppliers and business partners to collect data and implement sustainable practices.

DPPs are not mere electronic records; they are the proposed solution for a transparent and sustainable future. Since digital product passports will offer significant business advantages, there are many reasons for organisations to get involved and start preparing in advance, using regulatory compliance to their advantage.