How Companies Should Prepare for Regulations on Digital Product Passports
How Companies Should Prepare for Regulations on Digital Product ... Supply and Demand Chain Executive
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Sustainable Development Goals (SDGs) and the Role of Digital Product Passports
You may have already heard how digital product passports (DPPs) will play a role in a more sustainable future. Companies can leverage this technology to create visibility from end to end in the production process, helping consumers and regulators hold companies accountable for their environmental footprints and labor practices.
Because supply chains tend to be long and complex, consumers often don’t know where their goods originated, what they are made from or who was involved in creating them. DPPs are a way to increase transparency by tracing the item and its components through every step of the supply chain. Moreover, DPPs can help verify sustainability claims and protect companies against greenwashing claims and legal violations.
Delivering this level of traceability to supply chains also enables a circular economy, a production model that reuses and repurposes materials continuously in a closed loop. This is in contrast to our current wasteful open-loop system which is dependent on materials constantly flooding in and out.
But improving supply chain visibility and adopting circularity are not just moral or altruistic imperatives. They are also becoming legal mandates. Governing bodies around the world are pushing for DPP usage as a way to create more sustainable products and industries. Let’s take a closer look at these legal mandates.
Legal Mandates for Digital Product Passports
The European Union (EU) has already passed several directives dictating the usage of DPPs in its trade bloc, with many more proposals pending. For example, in accordance with the recently enacted EU Battery Regulation, all electric vehicle and industrial batteries sold in the EU from 2026 onwards will be required to have a digital battery passport containing key product information. This includes battery characteristics, performance and durability history, and recyclability. Anyone interested can access this information by scanning the QR code on the battery.
The EU Commission has also formally announced its intention to introduce a digital product passport for textiles based on mandatory information requirements on circularity and other key environmental aspects. These requirements for the textiles sector are expected to come into force by around 2030, dictating supply chain visibility for everything from footwear to mattresses.
Other geographic regions are also implementing regulations to create more sustainable products and industries. Many countries across the EU are implementing various extended producer-responsibility laws to increase the accountability of manufacturing companies.
Benefits of Being Proactive
Even though strict requirements for digital product passports may be years away, especially outside of the EU, there are several reasons to start the process of implementation now.
- Implementing a digital product passport system requires significant effort, time, and resources. By delaying implementation, companies risk falling behind their competitors and losing out on potential business opportunities.
- Delaying adoption of this technology can result in a significant delay in achieving alignment with suppliers, partners, and customers who may have already implemented the technology. This delay can cause a misalignment of priorities, resulting in costly mistakes and disruptions in the supply chain.
- Getting involved now with DPPs means shaping industry standards. By adopting digital product passports early, companies can help influence the development of future technology and regulations. This proactive approach can lead to a competitive advantage and increased brand recognition.
Steps to Adopt Digital Product Passports
If your company has decided to adopt digital product passports for your supply chain, it can be difficult to know where to start. But the general process should go something like this:
- Map out regulatory requirements for data transparency. Identify the regulatory requirements that your company needs to comply with, as well as any additional information that would be useful to track for your specific products.
- Identify any gaps in your current data collection and management processes. Determine what information you need to gather yourselves, what information is located elsewhere in your supply chain, and how you can work with your partners to obtain reliable data. Develop a strategy for closing these gaps and ensure that your partners are aware of the requirements.
- Identify the requirements for a digital product passport system to meet your needs. Start by identifying potential providers that meet your requirements and begin vetting and testing them. Ensure that the providers have a reliable track record specific to the field of digital product passports and can provide the necessary support and maintenance for the system.
By following these steps, you can ensure that you are well-prepared to adopt DPPs as your industry shifts in that direction. Remember that this can be a complex process that requires careful planning and collaboration with your supply chain partners. But with the right strategy and system in place, digital product passports can bring not only regulatory compliance but also significant operational and reputational benefits to your company and help you stay ahead – and visible – in a rapidly evolving market.
SDGs, Targets, and Indicators
| SDGs | Targets | Indicators |
|---|---|---|
| SDG 12: Responsible Consumption and Production | Target 12.6: Encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle | – DPPs can help verify sustainability claims and protect companies against greenwashing claims and legal violations. – DPPs enable a circular economy, a production model that reuses and repurposes materials continuously in a closed loop. |
| SDG 12: Responsible Consumption and Production | Target 12.7: Promote public procurement practices that are sustainable, in accordance with national policies and priorities | – DPPs can create visibility from end to end in the production process, helping consumers and regulators hold companies accountable for their environmental footprints and labor practices. |
| SDG 12: Responsible Consumption and Production | Target 12.8: By 2030, ensure that people everywhere have the relevant information and awareness for sustainable development and lifestyles in harmony with nature | – DPPs increase transparency by tracing the item and its components through every step of the supply chain, providing consumers with information about the origin, materials used, and labor involved in creating the goods. |
| SDG 9: Industry, Innovation, and Infrastructure | Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes | – DPPs enable a circular economy, which promotes resource-use efficiency and reduces waste by reusing and repurposing materials in a closed loop. |
| SDG 17: Partnerships for the Goals | Target 17.16: Enhance the global partnership for sustainable development, complemented by multi-stakeholder partnerships that mobilize and share knowledge, expertise, technology, and financial resources | – Companies adopting DPPs early can help influence the development of future technology and regulations, contributing to the global partnership for sustainable development. |
Behold! This splendid article springs forth from the wellspring of knowledge, shaped by a wondrous proprietary AI technology that delved into a vast ocean of data, illuminating the path towards the Sustainable Development Goals. Remember that all rights are reserved by SDG Investors LLC, empowering us to champion progress together.
Source: sdcexec.com
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