With the EU imposing sweeping new sustainability legislation, organisations will be shifting their ESG approach in preparation for the raft of new regulations. For many, this will include developing a Digital Product Passport strategy.
The Ecodesign for Sustainable Products Regulation (ESPR), which covers a multitude of product groups and industries, the Battery Regulation, and the updated Construction Product Regulation (CPR) mandate implementing Digital Product Passports (DPPs) to enable access to granular product environmental and sustainability data for both stakeholders and consumers.
Businesses will need to review their value chain comprehensively, evaluate data management practices related to product data, and identify the relevant stakeholders to engage in an effort to generate a robust Digital Product Passport Strategy that’ll guide them towards a successful DPP implementation and compliance.
What are Digital Product Passports (DPPs)?
First proposed by the European Commission within the text of the ESPR, Digital Product Passports are a revolutionary new tool for sharing product lifecycle and sustainability data with stakeholders throughout a business’s value chain and consumers.
Accessible via a data carrier such as a QR Code or RFID technology. The legislation mandating DPPs requires the information contained within them to be verifiable, transparent and up-to-date. The type of data included in DPPs can include:
- Raw Material Composition
- End of Life Instructions
- Instructions for Remanufacturing
- Sustainability/Carbon Footprint
- Recyclability
- Water Usage
- Overview of Harmful Materials
- Warranties
With the detailed insight into product sustainability and lifecycle, Digital Product Passports can act as a key piece of data infrastructure for enabling several circular economy use cases.
For example, the instant access to this product information afforded by DPPs can allow customers to make more informed, sustainable purchase decisions, as well as provide product usage instructions, warranties, and recycling and ethical disposal instructions.
Supply chain stakeholders also benefit from this data. Retailers and wholesalers can make more environmentally sustainable supply decisions, and specialist recycling companies can use product composition and recycling data to make their operations more effective.
With several pieces of legislation mandating that 30 or more specific industries must implement Digital Product Passports for their products, some as early as 2027, it’s imperative that businesses take steps to prepare for them now – and perhaps most importantly, develop an effective Digital Product Passport strategy.
Why is a Digital Product Passport Strategy Important?
Firstly, a Digital Product Passport strategy can help you understand the requirements and scale of the organisational impact that DPPs will have on your business. Implementing Digital Product Passports will not be a small endeavour – it will take significant time, planning, and resource allocation.
A comprehensive Digital Product Passport strategy will help your organisation realise the effort required to successfully roll out DPPs across your product set, which departments and value chain stakeholders will need to be involved in the process, and the kind of timeframe that implies.
Secondly, the process of building a Digital Product Passport strategy will help you gauge your organisation’s overall readiness for implementation.
During the process, you will need to evaluate your value chain and the data points that you have. You might easily confirm that you have a robust data management strategy already in place. Equally, you might find significant knowledge gaps which require remedying.
For instance, you may not be recording accurate carbon footprint data directly linked to each product or product line, or the raw materials data you receive from your product manufacturer might not be up to the standard required by the DPP mandate.
Your Digital Product Passport strategy will help you to build a roadmap towards ensuring that you have access to the necessary data and the robust data management infrastructure required for a successful DPP implementation
As well as helping you with your DPP implementation, this will aid your organisation’s compliance efforts with other regulations that cross over heavily with DPP-related legislation, such as the CSRD.
4 Steps for Building a Digital Product Passport Strategy
1. Evaluate Your Reasoning for Implementing DPPs
While it’s almost guaranteed that a DPP project will be multi-faceted and driven by several motivations, it’s important to understand the driving force behind implementing DPPs as this can alter how your DPP infrastructure is ultimately shaped.
Compliance
One of the universal reasons for investing in DPPs is likely to be compliance with new legal directives brought forth by the EU that affect companies on a global scale. The ESPR, for example, covers physical products from several industries that enter the EU market, regardless of their location of origin.
Each company needs to review the latest legislation and determine whether their products fall within scope to understand what data must be collected to ensure compliance when constructing your Digital Product Passport strategy.
Those in construction or batteries have their further pieces of DPP legislation to contend with alongside ESPR compliance which may give these organisations additional, industry-specific data points to consider beyond what is specified in the ESPR.
Achieving Sustainability Goals
It could be that your organisation has been undergoing a sustainability transformation regardless of any incoming regulations. Consumer attitudes are heavily trending towards sustainability and circular business practices, providing a financial incentive for organisations to set themselves strong sustainability goals.
If this sounds familiar, you might want to centre your Digital Product Passport strategy around achieving these sustainability goals, focusing heavily on collecting key environmental data such as product carbon footprint and raw material composition data.
Organisations heavily focused on sustainability beyond necessary compliance may wish to build out a Digital Product Passport strategy that aims to gather more granular sustainability data than is required by the ESPR and other regulations that will help them align even further to their sustainability goals.
Customer Experience
Since DPPs can open new customer engagement opportunities for brands, organisations may choose to include a focus on customer experience within their Digital Product Passport strategy beyond sustainability and compliance goals.
For instance, luxury goods organisations might see DPPs as a digital tool to help with product authentication and proof-of-ownership. DPPs can act as a new direct marketing channel, a service & warranty channel, and could even be used to offer loyalty and rewards programmes.
Looking at DPPs as another touch point for consumers to communicate with brands will influence how these organisations’ Digital Product Passport strategies are shaped as they plan to extend their DPPs to include data not strictly required from a sustainability or compliance perspective.
2. Data Gap Analysis and Readiness Assessment
Once you’ve gained a solid understanding of your reasoning for implementing DPPs, an examination of your organisational value chain and its potential data points needs to be conducted, followed by an organisational readiness assessment.
Data Gap Analysis
A data gap analysis is the process of examining your organisation’s value chain, checking what kind of data and data sources you already have, and determining what data is missing in order to achieve the DPP objectives outlined above.
Make sure to answer questions such as:
- What data do we want (and need) to include?
- How much of this data do we currently have access to, and how much of it will need to be gathered from external sources?
- What internal and external stakeholders do we need to engage and collaborate with?
Your organisation’s size will inform how extensive this examination needs to be – for instance, the Digital Product Passport strategy will be vastly different for an SME as it will be for a large multinational, mainly because the large multinational will likely have thousands of data points to manage, whereas an SME will have significantly less to contend with.
Additionally, it’s important to understand the quality of data sources throughout the value chain. DPP regulations emphasise that the data contained within DPPs must be verifiable, transparent and up-to-date.
Readiness Assessment
Carrying out a readiness assessment as part of your Digital Product Passport strategy will help you determine where your organisation is today and where your organisation needs to get to in order to implement DPPs successfully.
This should include asking questions about your organisation’s capacity and willingness to adapt and change. What is the internal appetite for a project as wide-ranging as a DPP implementation? Have new technologies been readily adopted into your organisational infrastructure in the past?
Determining your organisational readiness will involve extensive collaboration with many different internal departments. To help facilitate this, organisations may want to bring in specialist external advisors and Digital Product Passport Consultants to do educational workshops with department leaders to explain the scale and benefits of a DPP implementation as it applies to them.
3. Set Clear Goals, Objectives & Actions
Once you have completed the above steps, it’s time to add some tangible goals and objectives to your Digital Product Passport strategy with the appropriate actions to guide your organisation towards a successful DPP implementation.
To illustrate how an organisation might go about doing this, we’ve included two examples below from organisations with different profiles and goals:
Example: Large Multinational Organisation
Company Size: 10,000+ Employees
Industry: Textile Manufacturing
DPP Needs: Compliance with ESPR and Achieving Sustainability Goals
Goal & Objectives:
- Data Management Enhancement – Improve sustainability data collection and management processes to handle DPP requirements efficiently by the end of 2025.
- By 2027, implement Digital Product Passports for all textile products sold in the EU to comply with ESPR regulations and enhance sustainability practices.
Actions:
- Form a Cross-Functional Team (Q1 2025):
- Establish a team including members from compliance, sustainability, procurement, and IT departments to oversee the DPP project.
- Conduct Supply Chain Audit (Q1–Q2 2025):
- Identify all suppliers and assess current data availability and quality related to raw materials and production processes.
- Enhance Data Systems (Q3–Q4 2025):
- Upgrade existing data management systems to efficiently handle the increased data flow required for DPPs.
- Supplier Engagement (Ongoing):
- Collaborate with suppliers to collect necessary sustainability data and encourage adoption of best practices.
- Pilot DPP Implementation (Q1 2026):
- Launch a pilot program for a select product line to test the DPP process and make necessary adjustments.
- Full Rollout (Q2 2026–2027):
- Expand DPP implementation to all textile products sold in the EU, ensuring continuous compliance and improvement.
Since compliance will be a major factor for most (if not all) companies considering a DPP implementation, it’s important to set a timeline to achieve your organisation’s objectives that align with regulatory deadlines.
4. Engage a DPP Consultancy Partner
Creating a Digital Product Passport strategy might seem daunting, with various moving parts, stakeholders, and a potential mass of data points to contend with. It would be prudent to consider working with a specialist DPP Consultancy Partner.
Engaging with a DPP Consultancy Partner will give your organisation access to the necessary expertise to ensure an efficient and effective DPP implementation.
A DPP Consultancy Partner will review your business and recommend the best type of solution tailored to your business by evaluating your DPP needs, conducting a data gap analysis and readiness assessment, and helping you set clear goals to deliver on your Digital Product Passport strategy.
Protokol is a specialist DPP Consulting and Solution partner that design and build DPP solutions, working with your company to create a robust Digital Product Passport strategy tailored to your organisation’s specific needs and objectives.