Digital Product Passport: Opportunities and Challenges for Companies
The Digital Product Passport drives sustainable business and supports the achievement of environmental and sustainability goals.
We live in a globalized world. Every day, we consume products and food from all parts of the world. And simultaneously we receive news about the negative consequences of our consumption behavior. In fact, the production of many everyday products also results in environmental pollution, the destruction of habitats and increased greenhouse gas emissions. To stop driving consumption at the expense of others, the European Commission launched the "European Green Deal" in 2019 and the "Circular Economy Action Plan" in 2020. Among others, both strategy papers deal with topics related to a sustainable supply chain and cite the digital product passport as an essential tool for a climate-friendly and resource-efficient economy.
European Green Deal and Circular Economy Action Plan
Anybody who closely follows debates on climate policy will find it difficult to avoid the term "European Green Deal". The concept of the "Green Deal" aims to reduce net emissions of greenhouse gases to zero by 2050, thus making Europe completely climate neutral. The "Circular Economy Action Plan" - an action plan for a cleaner, more competitive Europe, which focuses on the beginning of the production chain, i.e., the design of products - is projected to help in this endeavor. The idea behind the plan is to focus on expanding the requirements for energy efficiency and promote the absence of pollutants, to increase aspects such as durability, reparability, and the recycling of raw materials.
Digital product passports were devised to promote a more efficient use of resources, reduce waste and material consumption as well as meet the target of firmly establishing a sustainable supply chain. While it does not yet exist in practice (holistically), it could soon be launched by the German Federal Ministry for the Environment, Nature Conservation, Nuclear Safety and Consumer Protection (BMUV).
What is a digital product passport?
A digital product passport records all the relevant data of a product along its entire life cycle: from raw material extraction to the recycling process. According to the German Federal Ministry for the Environment, the ideal process for the digital product passport is as follows:
Raw material producers send data to about location, conditions, etc. to producers who will use their raw material.
The producers also provide and receive information about the raw materials as well as feedback on the condition of the product and its components.
Retailers receive information on raw materials and production and send feedback about the product.
The end customer receives relevant product information, such as environmental impact, repair options and disposal.
Repair providers receive information on repair and spare parts. Additionally, they send information regarding the condition of products and components.
Waste management companies receive information on material composition and quality.
This process ensures a high level of transparency - for all players throughout the value chain.
Advantages of a digital product passport
As a central point, the digital product passport contains all the information about a specific product which it can provide to the respective user group. At the click of a mouse, the user receives a kind of "digital laundry list" of a product and can take a close look at its entire life cycle from raw material extraction to recycling. Based on this information, the user can decide for or against the purchase. But it is not only the end consumer who benefits from the transparency created by a digital product passport. Other stakeholders throughout the value chain also benefit from the detailed information. The goal being that the digital product passport leads to a more conscientious selection of raw materials, more sustainable production, and more effective recycling processes - aspects that not only have a positive impact on our climate, but also offer a good argument in terms of marketing.
For which products would a digital product pass suitable?
There is a great need for more information regarding the numerous products in our daily lives. Therefore, in the long term, it makes sense to create a digital product passport for every product. Initially, the focus will be, however, on particularly resource and energy-intensive products, such as smartphones, consumer electronics and electrical appliances.
What are the current challenges?
Although discussions about digital product passports are intensifying within the German Ministry for Environment, concrete and comprehensive concepts about how the product passport should look like or be implemented in the future do not yet exist. One of the biggest challenges in this context is certainly data management - especially for small and medium-sized companies. The effort involved in providing, preparing, and updating data can quickly become a complex burden. In addition, the protection of trade secrets, including within the supply chain must be ensured. Also, it has not yet been clarified whether the digital product passport should apply to individual products or to product families. While the first partial attempts to realize digital product passports are currently in progress, these have not yet been institutionalized through mandatory standard data sets or central databases.
material.one – extending the building blocks for the digital product passports
Digitizing the collection, analysis, and evaluation of product and material data is essential to drive sustainable business. While the digital product passport captures information about product origin, composition, end-of-life handling and repair as well as disassembly options, material.one provides the network that brings all stakeholders from the entire value chain together. Our digital platform extends the building blocks of the product passport by helping to effectively master elementary aspects of product management, like responsible sourcing, product carbon footprint and product durability. With material.one, all stakeholders benefit from the standardized exchange of digital data within the supply network.
Conclusion: The digital product passport offers great potential for innovation
Whether climate protection, circular economy, or resource efficiency: sustainable business is only possible if value creation and supply networks become more transparent. The digital product passport can bring about greater clarity, because it offers a standardized, transparent, and comparable format for recording all product and sustainability data - with just a few clicks. Not only does it support the goals for more sustainable development as set forth by the "European Green Deal" and the "Circular Economy Action Plan," it also provides end consumers with the information they need to make more environmentally and climate-friendly purchases in the future. These are all elementary aspects for the protection of climate and biodiversity as well as in the fight against exploitative working conditions. The digital product passport has everything it takes to establish itself as the new standard.
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With material.one all stakeholders can collaborate a standardized manner in a compliance conforming way based on the "need to know". As an industry cloud platform, material.one provides information on material and material sampling, percentage of recycled material, certificates as well as CO₂ footprint information.