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Digital Product Passport: Ticket to achieving a circular economy

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Digital Product Passport: Ticket to achieving a circular economy

Sustainability used to be a mere footnote in annual reports, but today, it's an integral part of what businesses offer their customers, with 60% of buyers rating it as an important purchase criterion. While it has been largely optional and driven by consumer demand, with the digital product passport (DPP) requirement passed under the European Green Deal (EGD) — a comprehensive plan to achieve climate neutrality by 2050 — transparency about product sustainability will soon be mandatory within the EU.

The goal is to provide clear insights into a product's environmental impact and lifecycle while offering guidance on reusability, repair, and maintenance. Therefore, the digital product passport is a major step towards a circular economy – with comprehensive product data as a powerful vehicle to reach sustainability targets. With 38% of customers expressing the need for clearer information regarding the sustainability of products and services, now it’s the time for businesses to prioritize transparency and actively engage in providing the necessary data and guidance.

In this blog post, we delve into the benefits of preparing for the new regulation, the importance of data for the digital product passport, and how Product Information Management (PIM) systems can help create profitable solutions that encompass the entire value chain.

The Digital Product Passport: What it is and why it’s important

A digital product passport (DPP) is a product-specific data set aimed at enhancing the sustainability and circularity of products in the EU. It provides consumers, companies, and policymakers answers to questions such as: where does the product come from, how it is made, how it can be reused, and which sustainability labels it has. By emphasizing circular economy principles, these passports can help consumers make sustainable choices and enable businesses to develop greener products. Essentially, a DPP is an electronic record that contains all the essential information about a particular product, consolidating data from its inception to the end of its life cycle. The DPP could be accessed by scanning a QR code, NFC tag or RFID tag or by clicking a link on the product page of a brand's ecommerce website.

The adoption of DPPs aligns with global efforts to promote responsible consumption and production. Digital Product Passports are designed to be easily accessible throughout a product's lifecycle, enabling transparency, accountability, and traceability. It’s a promising step towards a more sustainable future, where products are valued not only for their functionality but also for their environmental impact and potential for reuse and recycling. While the European Commission is at the forefront of this initiative, the concept may inspire similar efforts globally as organizations and governments seek to address sustainability concerns.

Primary objectives of the Digital Product Passport

Digital product passports are catalysts for positive change in our consumption patterns and business practices. Their goals encompass empowering consumers to make informed decisions and fostering sustainable commerce.
Implementing DPPs aims to achieve the following:

  • Fuel sustainable business practices
    These passports provide invaluable data for businesses and ensure compliance with all applicable regulations. By offering insights into consumer preferences and environmental performance standards, these passports inspire the design and promotion of greener products.
  • Empower informed consumers
    As a source of information for consumers, DPPs provide insights into a product's origin, composition, and environmental footprint. They empower individuals to make choices that align with their values and sustainability aspirations, driving a more environmentally conscious consumer culture.
  • Efficient recycling and waste reduction
    DPPs streamline recycling and waste management processes by arming recyclers with essential product data. This includes material composition, disassembly instructions, and recycling guidelines, significantly reducing the volume of waste destined for landfills.
  • Promote the circular economy
    DPPs promote product reuse and recycling, extending their life cycles and minimizing the consumption of valuable resources. This helps address resource scarcity.
Varo uses 2D barcodes to provide consumers with extensive information

Business benefits of the Digital Product Passport

The digital product passport isn't just a sustainability initiative; it's also a strategic advantage for businesses. Beyond its environmental benefits, DPPs offer a range of advantages that can enhance a company's competitiveness and bottom line.

  • Increased consumer trust
    By capturing data throughout a product's entire lifecycle — from manufacturing all the way to recyclability or disposal — businesses can provide consumers with a comprehensive and real-time view of a product's state and authenticity. This aligns with the fact that 46% of consumers seek clarity regarding product sourcing. Such transparency enhances buyer confidence, ultimately leading to increased customer retention and loyalty.
  • Market differentiation
    With an overwhelming 80% of global consumers demanding brand transparency regarding environmental impacts in production, DPPs offer a clear window into a product's sustainability journey. They provide a unique selling point that resonates with eco-conscious buyers, positioning businesses as leaders in the sustainability-driven market.
  • Compliance
    Supply chains, often marked by complexity and tracking challenges, find a streamlined solution in DPPs. They simplify data tracking and access, enabling organizations to monitor compliance with initiatives in real-time. Notably, 78% of investors prioritize environmental, social, and governance (ESG) activities, even if they impact short-term profits. DPPs bridge this gap, providing a practical avenue for companies to improve ESG outcomes and operational efficiency simultaneously.
  • Resource efficiency
    DPPs play a pivotal role in reducing resource costs. On average, European manufacturing firms allocate 40% of their costs to raw materials, and when factoring in energy and water expenses, this figure climbs to 50% of total manufacturing costs. By offering manufacturers comprehensive insights into a product's materials and components, DPPs enable more efficient resource allocation and material sourcing decisions.


Who is impacted by DPP regulation?

DPP regulations, introduced by the EU in March 2022 are poised to have a global impact on value chains. Although originating in Europe, these regulations have far-reaching implications, as any product entering the EU market will be subject to DPP requirements. This means that companies worldwide, even those headquartered outside Europe, must provide digital product passports for their products if they intend to sell them in EU countries.

The scope of DPP requirements will extend to various sectors, aligning with EU’s Circular Economy Action Plan. Pressure and initiatives to adopt more sustainable business practices are being felt across various industries, including:

  • Batteries
  • Automotive
  • Fashion
  • Electronics
  • Plastics
  • Construction
  • Chemicals

While these industries are the initial focus, the aim is to eventually extend the requirements to all products in the European market. As DPP regulations evolve and expand, their influence is likely to extend beyond European borders, affecting industries worldwide.

The importance of data for the Digital Product Passport

According to the World Business Council for Sustainable Development, “All advanced circular economy strategies, from refurbishment to recycling, depend on the availability of reliable and up-to-date data, which is currently largely unavailable.” The DDP represents a shift in the way products are designed, produced, and consumed, requiring access to data and insights not traditionally available to retailers and manufacturers. It involves meticulous data collection from a product’s design phase throughout its entire lifecycle. The DPP is continually updated, becoming a dynamic repository featuring core components like basic product data, material data, ownership data, repair data, and sustainability data.

Data in DPPs fuels the shift to a circular economy, improving product design and supply chains. Manufacturers can leverage this to create more recyclable and sustainable products, aligning with consumer preferences and ensuring regulatory compliance. However, preparing for compliance with DPPs requires businesses to take several crucial steps. This includes organizing product data, establishing transparent data processes, and informing suppliers about the new transparency requirements. This commitment to transparency extends to ensuring that all information within DPPs adheres to open standards, which improves interoperability, machine-readability, and easy searchability.

What will be the impact of using PIM for DPP development?

As your business transitions towards DPP compliance, it’s crucial to implement robust data management practices and establish structured digital workflows. With the integration of a PIM system, you can elevate your data management capabilities to a whole new level — maximizing your ability to meet DPP goals. Integrating a PIM system allows you to seamlessly incorporate sustainability data into your product information, aligning your packaging strategies with DPP standards.

A PIM system creates a single source of truth for all product-related information, ensuring that the data used for packaging design, labeling, and messaging is accurate and consistent. PIM also supports agile development and rapid iteration within DPPs. This adaptability is critical to remaining competitive and innovative, as it allows you to respond quickly to changing market demands and user preferences.

Leveraging a Software-as-a-Service (SaaS) PIM system takes this agility to the next level. With a SaaS PIM, you gain more scalability so you can easily accommodate additional sustainability data sources and meet new requirements as new regulatory initiatives emerge or DPP standards evolve in the future. By extending your PIM system's capabilities to include sustainability data and aligning with DPP's environmental objectives, you can meet environmental standards while showcasing your commitment to environmental responsibility.

How can PIM help in developing the Digital Product Passport?

The success of a DPP depends on the availability of comprehensive data, sourced from various stages of a product's lifecycle. This is precisely where PIM systems come into play. They are designed to process and synchronize data from multiple sources, making them ideal to collect and organize the wide range of information required for a DPP, including a product's specifications, materials, manufacturing processes, and compliance details.

Additionally, PIM systems allow you to enrich this data with sustainability metrics, environmental impact assessments, and compliance information, making your DPP more comprehensive. With data governance, version control, and integration capabilities, PIM helps enhance transparency, sustainability, and compliance in DPP development.
PIM systems can help in several ways:

  • Centralized data management
    PIM systems centralize product data, making it easier to collect, organize, and update information related to the product's specifications, materials, components, and attributes. This centralized data serves as the foundation for the DPP.
  • Data standardization
    PIM ensures that product data is standardized and consistent across all channels and platforms. This consistency is essential for creating a reliable and accurate digital product passport.
  • Version control
    Many PIM systems incorporate version control features, ensuring that you can track changes and updates to product information over time. This version history is valuable when maintaining a DPP, especially as products evolve and change.
  • Data integration
    PIM systems can integrate with other data sources and systems, such as ERP (Enterprise Resource Planning) systems, PLM (Product Lifecycle Management) systems, and external databases. This integration helps gather a broader set of data for the DPP.
  • Data governance
    Robust data governance features allow you to define and enforce data quality standards, access controls, and data stewardship. This ensures that a digital product passport contains reliable and trustworthy information.
  • Data accessibility
    A centralized repository provided by a PIM system gives authorized stakeholders the ability to access and contribute to product data — a crucial aspect for collaborative efforts in DPP development and maintenance.
  • Scalability
    PIM systems are designed to handle large volumes of product data, making them suitable for organizations with growing product catalogs and complex data requirements, which are common in DPP initiatives.

Contentserv supports your move toward circularity

As consumers increasingly prioritize transparency, they actively seek detailed information about product origins, environmental impacts, ingredients, and other details. Enter the digital product passport – a game-changing advancement in product management, promoting sustainability and the circular economy.

However, the DPP relies on accurate and comprehensive data to achieve transparency, traceability, and enhanced consumer information. This is precisely where Contentserv steps in, offering your organization a scalable source of truth for product information. Our PIM system helps you efficiently organize, validate, and distribute data in compliance with DPP standards.

With the right PIM solution, product transparency can evolve from a compliance issue to a competitive advantage. Consider the success story of Varo, a leading European distributor of power tools and garden equipment. To meet evolving consumer demands, Varo made changes to the product packaging, such as including QR codes, that differentiate the company and put it at the forefront of DPP compliance. With Contentserv's PIM system, Varo doesn't merely offer information; it provides answers to questions consumers didn't even know they had.

Just as Varo took the lead by embracing our PIM system to meet consumer expectations, you too can leverage Contentserv to not only exceed DPP compliance but also deliver the engaging, informative, and sustainable experiences that set you apart. It's not just about meeting standards; it's about creating a future where your brand's commitment to transparency and sustainability shines brightly.

Are you ready to harness the power of data to prepare for your Digital Product Passport (DPP) and engage consumers like never before?

Explore Contentserv's PIM solution now.