Digital product passports (DPP) aim to gather data on a product and its supply chain and share it across entire value chains so all actors, including consumers, have a better understanding of the materials and products they use and their embodied environmental impact.
The digital product passports initiative is part of the proposed Ecodesign for Sustainable Products Regulation and one of the key actions under the Circular Economy Action Plan (CEAP). The goal of this initiative is to lay the groundwork for a gradual introduction of a digital product passport in at least three key markets by 2024. These include textiles, construction, industrial and electric vehicle batteries, and at least one other of the key value chains identified in the Circular Economy Action Plan such as consumer electronics, packaging, and food.1
The implementation of digital product passports in these value chains is designed to support:
- Sustainable product production - enable the transition to circular economy and therefore boost material and energy efficiency, extend product lifetimes, and optimise product use.
- Businesses to create value through circular business models - thanks to the improved access to data with digital product passports, more businesses can implement service and repair based business models.
- Consumers to make more informed purchasing decisions - once they are provided with information on the total impact of their buying behaviours.
- Verify compliance with legal obligations - the digital product passport will also act as a record of the standards a product complies with and provides auditors with a data to evaluate this.2
But which products will be the first to implement digital product passports? What specific data will need to be included? How do you even go about implementing such a digital documentation system? And why make the effort to get ahead of these legislations?
In this article, we will discuss what is known so far about digital product passports, this new means of material traceability and data sharing.
Who will need to implement digital product passports?
Battery passports have set precedent for digital product passports, but with other related regulations coming into effect like the proposed Ecodesign for Sustainable Products Regulation, other digital product passport requirements will be rolling out. These will be based on targeted product categories that align with the EU Circular Economy Action Plan.
Textiles, construction, electronic waste, plastics, chemicals, and automotive sectors are all seeing pressures and initiatives to move to more sustainable business practices. Legislation is set to connect across these different product categories as part of the increasing push for digitisation, connected data sets, and assessment of environmental impact across product life cycles.
Digital product passports are also not a stand-alone idea, elements of traceability, chain of custody and data sharing requirements are also present within a range of other regulations. These all form part of the European Union’s Digital Transition3 and Data Spaces3 plans designed to harmonise and standardise access to data. Some of the relevant regulations include:
What information will need to be included in a digital product passport?
Data requirements for digital product passports are still being determined and will be set for each individual product category based upon a process of industry-wide stakeholder consultation.9 Creating the passport will call for the whole supply chain to cooperate and define the crucial information that could prevent a product from going to waste. However, some of the data requirements are being set already. For example, Chapter III of the proposed Ecodesign for Sustainable Products Regulation Regulation outlines the general and technical requirements for creating, accessing and sharing digital product passports.5
The general requirements for digital product passports include complying with the following conditions:
- It shall be connected through a data carrier to a unique product identifier.
- The data carrier shall be physically present on the product, its packaging or on documentation accompanying the product.
- The data carrier and the unique product identifier shall comply with standard (‘ISO/IEC’) 15459:2015.
- All information included in the product passport shall be based on open standards, developed with an interoperable format and shall be machine-readable, structured, and searchable.
- The information included in the product passport shall refer to the product model, batch, or item.
- The access to information included in the product passport shall be regulated in accordance with the essential requirements set out in Article 10 and the specific access rights at the product group level shall be identified in the applicable delegated act adopted pursuant to Article 4.
For a complete list of the requirements for digital product passports laid out in the proposed Ecodesign for Sustainable Products Regulation, you can download the full proposal here.
Battery passport criteria
From 2027, every industrial and electric vehicle battery must come with a digital product passport (a battery passport). The required information links to safety requirements and the targets for recycled content in batteries. More specifically, data must be provided for:
- Material sourcing
- Carbon footprint
- Percentages of recycled materials used
- Battery durability
- Repurposing and recycling guidelines10
Digital product passports for other types of products
The 2022 proposal for the proposed Ecodesign for Sustainable Products Regulation has also provided a framework for producing more sustainable products in the EU and stated that digital product passports will play a role in ensuring this. The aim is to maintain a 3-year roadmap of product groups that will be targeted by this framework, with the goal of implementing four product group-specific acts by 2024.
The EU Strategy for Sustainable and Circular Textiles and the Construction Products Regulation have already outlined digital product passports as potential future requirements to ensure compliance with their proposed frameworks. More specific guidelines on these sector-specific digital product passports are expected by the end of 2022.
The criteria for each type of digital product passport will then be determined by the various materials, processes, and data protection requirements relating to each product. However, if digital product passport systems develop with greatly varying requirements for different sectors, this could present a significant challenge for raw material suppliers who serve such a range of industries.
How to implement a digital product passports system?
Implementing a new enterprise system to comply with digital product passports is a significant undertaking. Concerns have already been expressed that digital product passports will become a bureaucratic system, burdening enterprises with further regulation - particularly small to medium enterprises. Clearly, this system needs to be straightforward to use, cost-effective, and protect a company’s proprietary information, so that it is accessible to all businesses and does not stifle innovation.
The practicalities of digital product passport implementation
From an operational perspective, it’s not as difficult as it may first seem. Once a framework is defined for the information to be included in digital product passports, traceability software can be used to standardise data sets coming from existing ERP systems. The required unique product identifiers can use existing technologies such as barcodes, QR codes, RFID tags, or similar, for digital product passport data submission. In the end, this process can be almost entirely automated.
Implementing a data transfer infrastructure for digital product passports
In most cases, the only major thing companies are missing is the infrastructure for an open, standard, interoperable format for the digital product passport data, that is also machine-readable, structured, and searchable, (per the essential requirements included in Article 9 of the proposed Ecodesign for Sustainable Products Regulation11). But thanks to the rapidly evolving world of blockchain, decentralised systems will be able to meet these requirements and provide key product information to the parties who value it most. These technological advances also mitigate the past criticism that decentralised blockchains have high operating costs and energy consumption. New blockchain technology developments will allow vast amounts of secure data transfer, using a fraction of the energy.
Protecting proprietary information - data storage
Ensuring data security is essential to protect trade secrets when generating digital product passports. “When it comes to intellectual property, privacy, and so on, we need to make sure that those are dealt with either through encryption or through making data available at a later date. In each case, this will be done product by product and in full consultation,” said William Neale, adviser for circular economy at the European Commission’s environment department. Also adding: “[w]e’re talking about mostly existing data. We’re talking about a decentralised or distributed approach to the data. It does not have to move from where it’s created”.12
Various forms of data storage and encryption will be needed to solve these challenges in different industries. Data storage can either be centralised or decentralised; but given the significance of the data being shared, using a centralised system with a private party in control of data storage and integrity, is not a secure or scalable solution for digital product passports infrastructure. A decentralised system will provide the most effective means of data interoperability.13
Decentralisation also means the owner of the product is also the owner of the digital record, rather than residing within the control of a central system where it could be tampered with. It also complements the EU Data Strategy which encourages high-value, publicly held data sources to generate value for companies, governments, and consumers. Due to the combination of all of these factors, Circularise chose to build its material traceability system on a public, decentralised blockchain.
Protecting proprietary information - data encryption
The concept of an open system sounds counterintuitive for protecting intellectual property, but this is where the topic of encryption comes in. For this type of system, encryption can be done in various ways, e.g. using RSA (Rivest-Shamir-Adleman), end-to-end, or with zero-knowledge proofs.
RSA encryption is sufficient for most operations done on the internet and end-to-end encryption is useful for messaging services. But if you do not want to share certain data at all (even if it is encrypted) as it is linked to proprietary information, being transparent about substantiating green claims is not possible with these methods of encryption.
Here is where zero-knowledge proofs can provide a more flexible means of achieving this data transfer, by allowing proof of information to be shared, without revealing sensitive product data. This means compliance with standards can be achieved without having to openly share data on material composition and operational procedures. This is also what allows Circularise to selectively share information insight across a supply chain, without storing data or risking data security.
Bureaucratic burden or growth opportunity?
Implementing digital product passport systems with the required data management process could be a time consuming and costly exercise that can hamper a business. Yet, innovation offers supply chain actors the opportunity to explore new ways to differentiate themselves and grow. The challenge will be reaching the scale required to unlock the potential held within digital product passports in a way that is inclusive for all businesses and does not hinder companies with endless regulations.
Here’s how you can get the most out of a digital product passport system:
- Gain a competitive edge
New product offerings that incorporate solid sustainability guarantees backed by data from digital product passports can gain supply chain actors a competitive advantage. Products can then be marketed with trustworthy and quantifiable sustainability claims.
This traceability data will allow value to transcend supply chain tiers and incentivise a network-wide sustainability transition. As with batteries, some products will need to provide product lifetime data, this will also invite innovation and competition on product durability and longevity.
- Introduce circular business models
This new digital connection throughout the supply chain can also be leveraged to strengthen relationships with downstream customers. A digital product passport can provide the opportunity to explore new business models with retained product ownership, that were not feasible in the past due to disconnected relationships across the value chain, but especially from the end customer to end of life. Designing waste out of systems will also unlock new revenue streams.
The facilitation of more effective end of life processes will unlock the value currently lost in end of life material and waste streams. As business models become more circular, this can also diversify material sourcing options and strengthen supply chain security within businesses.
Read more about generating value from DPPs and circular business models
- Become a sustainability leader
When end of life processing options must be presented with a product, it will encourage simpler material reuse cases when possible. These tighter loops will offer simple and cost-effective solutions to sustainability challenges and avoid the accumulation of valuable materials in the environment.
Going through the process of digital product passport implementation will also allow manufacturers to better understand their material flows and process efficiencies, to then implement improvements.
- Use legislation compliance to your advantage
Early compliance with regulation and adopting voluntary certification will also allow companies to capture a greater market share. Establishing an effective method of supply chain impact tracking now will place businesses in a leading position when traceability information becomes a basic requirement for material procurement.
Digital product passports will contain the information associated with products to effectively track and manage sustainability. As you may expect, this means they will vary greatly depending on the product. Batteries are the test case, but these requirements will spread as more supply chain traceability legislation comes into play, incorporating more product categories.
The technology already exists to implement an effective digital product passport, but businesses will remain sceptical until feasibility has been demonstrated at scale. Implementation of a digital product passport system will require investment, but when done effectively, systems will be able to run with little human intervention.
In the short term, providing trustworthy sustainability claims and moving to circular oriented innovation strategies via digital product passports, creates an opportunity for companies to generate new value and capture a greater market share. In the long term, this will position businesses in a favourable position when digital product passports become a legal requirement over the next few years.
Circularise is the leading software platform that provides end-to-end traceability for complex industrial supply chains. We offer two traceability solutions: MassBalancer to automate mass balance bookkeeping and Digital Product Passports for end-to-end batch traceability.
Explore Circularise's Digital Passport Solutions