In a world moving ever more rapidly towards a circular economy, the Digital Product Passport (DPP) is emerging as an essential tool to ensure transparency and traceability. However, the implementation of the DPP is not a simple regulatory compliance but a complex challenge that requires careful planning and organization. Based on direct experience gained from projects with companies in various sectors, we have identified the main difficulties that businesses are facing in this transition. The following considerations are not theories, but concrete lessons learned in the field.
The Digital Product Passport, a pillar of the European Green Deal, aims to revolutionize transparency and sustainability throughout the entire product lifecycle. While its objective is noble, the transition to this new system is not without pitfalls and presents several challenges that require careful planning.
The greatest challenge is data management. To create a comprehensive DPP, companies must collect detailed information along the entire supply chain, from raw material suppliers to distributors. This means facing:
- Data Heterogeneity: Suppliers, especially smaller ones, may not have the necessary systems or standards to collect the required data. Companies must therefore find a way to unify information coming from disparate sources, which are produced in different ways and with varying levels of granularity.
- Reliability and Verification: It is crucial to ensure that data is accurate and truthful. Companies must establish methods to verify the information received, in order to avoid errors and, above all, potential penalties. This process requires traceability tools and, in many cases, external audits.
The European Commission is working on the delegated acts of the Ecodesign Regulation (ESPR), but the specifications for each sector (fashion, furniture, electronics, construction, etc.) will be different and in continuous evolution. This creates uncertainty for companies that find themselves having to invest in technologies that could become obsolete. The main issues are:
- Lack of Regulatory Clarity: Companies are asking for clear guidelines and definitive standards to know exactly what information to include and how to structure it, especially as deadlines approach. These should be clarified with the individual delegated acts.
- System Interoperability: IT platforms and company databases must be able to “speak” to each other to exchange information efficiently. Without interoperability standards, data sharing across the various stages of the supply chain risks becoming a manual and inefficient process.
The implementation of the DPP is not a simple software update, but a transformation of some business processes. This entails:
- Technological Investments: Companies must equip themselves with specific tools for data management, passport creation, and integration with existing systems. Technologies such as blockchain, RFID, or advanced QR codes may be necessary.
- Personnel Training: It will be essential to train staff not only on how to use the new tools, but also on the importance and correct management of sustainability-related data (just think of what is involved in merely verifying the certifications on material properties).
- Compliance Costs: Companies, particularly SMEs, will have to bear the costs of ensuring regulatory compliance, which includes audits, consulting, and potential penalties for non-compliance.
Despite the ambitious challenge, what we are seeing in our ongoing DPP projects is that a gradual and collaborative approach from companies leads to results. Companies that take action early, even with small steps, are the ones that have the opportunity to turn this regulatory compliance into a competitive advantage, especially because of the “new information” they can access.
The initial phases of the project are fundamental for testing and refining data collection, perhaps starting with a single product line or a key supplier. This approach allows for a deep understanding of the complexities without overloading resources.
Starting a proactive dialogue with suppliers is fundamental. Sharing the vision and training the actors in the supply chain helps build a collaborative ecosystem, making data collection more fluid and efficient.
The information collected for the DPP is not only for compliance. It often becomes a valuable marketing tool to tell the story of a product’s sustainability to the final consumer, improving brand reputation and customer trust.