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Digitale Striptease: the digital product passport changes economy and communication.

Updated: Jun 29, 2023


Person is checking a product with her phone


Introduction


Sustainability sounds so simple. But if we take a look at what constitutes sustainability at its core, a highly complex field is quickly revealed: The product. Only if we know everything that goes into a product can we dispose of or recycle it sustainably at the end of its life - i.e. in the interests of the environment. The longevity of products is therefore the keyword of the day and one of the core elements of the circular economy. Products literally need a passport in which all the necessary information is listed. This is exactly what the political plans under the Green Deal envisage: the gradual introduction of a Digital Product Passport (DDP) as a key technology of product transparency. Read below:

  • What makes the DPP necessary?

  • Which companies should consider a DPP ?

  • What should the DPP do for whom?

  • What does the DPP cover?



The neccessary of a digital product passport


Let's remember the impressive example of Apple, in which the number of elements of an IPhone to be repaired increased massively between 2007 and 2020. Read on?

Yes no doubt: Society and the economy are undergoing gigantic changes: they are being driven and transformed on the one hand by the increasing transformation toward greater sustainability and climate neutrality, which is tending to cover the whole country, and on the other hand by digitalization. And for all players - at B2B, B2C and B2G level, one access will become increasingly important: transparent insight into product data within the value chain.

Sustainability poster of tom tailor

Circular economy needs data access


"Circular economy does not start with waste, but with product design. Only recyclable products can be kept in the loop." Eric Rehbock: Chief Executive Federal Association "Secondary raw materials and disposal" (bvse) Quelle.

The basic idea is relatively simple: only if I know what materials my purchased product is made of can I adequately dispose of or recycle it at the end of a product's life. This in turn fulfills the basic idea of the circular economy.


However, the complexity of implementing a circular economy can already be seen in the everyday example of "shoes": Here, the basic problem lies in the large number of different materials in the shoe. The effort required to separate these materials is extremely high, so that their return to the product cycle has proven difficult or hardly practicable so far (a shoe made of monomaterial that meets all functional requirements has not yet been invented). Until now, there has also been a lack of information about prefabricated parts, and consumers have often been unable to find out transparent information about products - or only with great research effort.

The Digital Product Passport (DPP) will be the intelligent and decisive key to implementing a functioning circular economy:


Click, click, transparency


In the DPP, manufacturers will in future document all information on the origin, composition, repair and dismantling options of a product. In this way, the digital passport will enable manufacturers, users and disposal companies alike to exchange data uniformly throughout the entire product life cycle. With just a few clicks, it should be possible in the future to find out all the product information about a product along the entire value-added cycle and thus also to read out the social and ecological footprint of products directly from the product.


With the DPP, the European Commission is thus responding to the need to transform the economy and society in a sustainable manner, to digitize in a meaningful way, and thus to lay an essential foundation for the successful implementation of the Sustainable Product Initiative (SPI):



Sustainable Product Initiative (SPI)

This sustainable products initiative aims to improve the overall sustainability performance of products and make them fit for a climate-neutral, circular economy. "Making them fit" means making them durable, reusable, repairable and recyclable, and energy-efficient. 
It falls under the European Commission's new Circular Economy Action Plan (CEAP) - a key building block of the European Green Deal - and is a framework regulation consisting of a series of legal acts designed to promote the circularity of the EU's internal market.


The EU has envisaged the introduction of a digital product passport by 2030 at the latest in order to be able to achieve the SPI targets. But the 2030 target horizon, which lies in the far future, should not deceive.


Digital product pass (DPP): The most important facts


Which sectors does the DPP affects?


Most companies will not have time to sit back and relax: basically, all products and thus sectors covered by the Ecodesgin Directive will be affected.


Ecodesign Directive

In fact, the design of a product is responsible for up to 80% of its environmental impact during its life cycle. The Ecodesign Directive formulates concrete sustainability requirements for products at EU level: according to it, all products are to be designed for environmental friendliness, recyclability and energy efficiency in the future. 
The Digital Product Passport (DPP), which all products covered by the Ecodesign Directive must have in the future, plays a key role here: it stores all the information about the entire life cycle of the product so that the ecologically oriented product design can be implemented, the respective product can be repaired or recycled more easily, substances of concern can be traced more easily along the supply chain, and consumers can make ecologically oriented decisions on the basis of this information in the product passport.

Since we are dealing with a gigantic digital transformation process and a mixture of political and economic interest groups, more and more sectors will be affected by the introduction of a DPP in the coming years. The first sectors to be affected will be the following:



  • Building Materials/Real Estate:

This is because it consumes 50% of all total resources (energy and raw materials), making it the most environmentally relevant industry.

  • Batteries:

Due to the complex extraction of raw materials, which takes place in developing and low-wage countries, as well as the increasing demand, this sector has a high explosiveness with regard to the observance of human rights and environmental pollution, since the extraction of raw materials (lithium, cobalt, etc.) often takes place under precarious conditions for people and the environment. Battery pass regulation at the German and European level is currently underway.

  • Textiles:

In this industry, too, human rights are in focus, but also environmental pollution via environmental toxins: often produced in developing and low-wage countries, a gigantic industry has developed that produces more and more, cheaper and cheaper - and where, on the other hand, more and more is thrown away: over 90% of all textiles end up directly in the trash and are not fed into any recycling process. That's why politicians are declaring war on "fast fashion".


The following sectors will be excluded from the DPP for the time being, since other political ministries are responsible than those that are launching the European DPP and one wants to avoid incompatibilities here:

  • Food

  • Feed

  • Pharmacy


Idea of a„Digital product pass“ isn't new

Digital documentation is already mandatory in the medical and nuclear industries, but also for safety-relevant products. In the automotive industry, too, data on configuration, faults, maintenance, repairs or even replacement parts are documented digitally. This data is not publicly accessible. 
This will now change fundamentally. Product data will become largely transparent information across all industries.


Who does the DPP affect?


A distinction must be made between internal and external interest groups. Within the company, these are specialists and managers from the areas of:

  • Compliance

  • R&D

  • Supply Chain Management

  • Business Development

These areas require transparent data in order to meet regulatory requirements, optimize product development, or adjust the overall strategic direction of the company, among other things.

Externally to the company, the following stakeholders will have to deal with the DPP:


  • Suppliers, who on the one hand have to disclose their data and on the other hand want to use their sustainability performance as a selling point.

  • Customer groups who want to make sustainable consumption decisions.

  • Repair companies that want to extend product useful life.

  • And, understandably, recovery and recycling companies.


The DPP thus includes a comprehensive group of addressees and is aimed equally at the business-to-business (B2B), business-to-consumer (B2C) and business-to-government (B2G) levels.


Waht data does the DPP includes?


The digital product passport links all steps of the product life cycle, from production to recycling, and thus gathers a (growing) variety of data on a product. This data is then continuously updated within the DPP over its life cycle - similar to a biography. The currently important data include:

  • Material master data as well as information on the material composition

  • Mining location and its working conditions

  • Sustainability data such as lifecycle CO2 emissions,

  • Recycling data such as dismantling instructions

  • Repair information is an important application: the passport enables more consumer-oriented access to identical and replacement parts as well as repair instructions.

  • At the end of the lifecycle, the digital product passport will provide information on how the product should be recycled, which components are suitable for remanufacturing, and which parts should be recycled or materially recovered.

  • General safety information


Information that is stored in the digital product passport




Which products receive a DPP?


In principle, a digital product passport can be created for any type of product.

Resource- and energy-intensive products, such as those used in cement or steel production, are particularly predestined for a DPP. The demand for transparent information is also high in the area of packaging and plastics: In the future, it will be possible to differentiate between individual plastics more precisely thanks to digital information. Instead of judging whether something is incinerated or recycled on the basis of weight, as is currently the case.


In the long term, however, all products will have a digital product passport.


What are the DPP's goals?


  • The DPP is the central digital instrument for implementing the SPI as part of the political Green Deal: digital networking can ensure the necessary comprehensive insight into and exchange of product data.

  • Accordingly, the DPP is intended to ensure the exchange of interoperable data along a supply chain across industries, companies, and users.

  • The DPP is intended to promote economic growth by providing stakeholders with broader access to data on product use, origin, and characteristics within a supply chain.

  • And the DPP is intended to help consumers make sustainable choices through improved transparency.



How does the DPP relate to the Supply Chain Sourcing Obligations Act (LkSG)?


In simple words: not at all. However, it can be assumed that this link will be established over the years. Moreover, the corporate interest in a DPP is indirectly related to the LkSG:


The German LkSG obliges companies to exercise more due diligence across the entire supply chain from January 2023. In concrete terms, this means that the companies concerned must set up a risk management system in order to identify environmental damage and human rights violations and, at best, take preventive action. Companies are no longer only responsible for their own actions, but also for the actions of contractual partners and indirect suppliers ("trickle-down effect").


If companies violate the LkSG after it comes into force, management must expect sanctions such as a restriction of market access and further legal consequences against the company as well as liability risks.

against the company as well as liability risks. Penalties of up to 2% of total annual sales may come into effect.


The subsequent European Supply Chain Act will have an even more stringent character:



The European Supply Chain Act

Unlike the German Supply Chain Act, victims of human rights violations can also enforce civil liability!
The EU law basically obliges all suppliers - not only those with a long-term established business relationship, as originally planned by the EU Commission.
In the German Supply Chain Act, the involvement of intermediate companies can circumvent the obligations. According to the will of the member states, this circumvention option is now closed throughout Europe.

Thus, forgery-proof traceability is in the interest of all companies affected in Germany and subsequently in the EU, as well as their direct and indirect partners and suppliers.



Digital CV for products becomes mandatory - even even without laws


In the future, the DPP will be much more than the digital result of a political climate campaign. Because the call for transparency and provenance has come to stay in our consumer culture.


Actors and interest groups from politics and business alike have a mammoth task and a tug and pull ahead of them. who will assert which interests and perspectives for which industry and sector.


Quellennachweise und zum Weiterlesen (Stand Februar 2023)


Digitaler Produktpass (DPP)

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