By: Kaylie Scalze
In December 2019, the European Commission (EC) launched The European Green Deal. This initiative is the EU’s plan to have a more sustainable future. The first milestone of the plan is to lower CO2 emissions by 55% by 2030. The final goal is to make Europe the first climate-neutral continent by 2050. In order to meet these goals, the EC has proposed numerous policy plans and initiatives to create a circular economy.
In 2022, the EC proposed a new regulation to prioritize sustainability through greater ‘durability, reusability, and circularity’ – the Ecodesign for Sustainable Products Regulation(ESPR). The ESPR aims to create more environmentally sustainable and circular products. The EC plans to implement the ESPR as early as 2026. To do so, the EC announced Digital Product Passports (DPPs) in December 2023. The rollout of this regulation will begin in 2026, and by 2030, the EU will mandate DPPs on every product.
The World Business Council for Sustainable Development (WBCSD) defines DPPs as “… a structured collection of product related data across a product’s lifecycle to advance the transition to a circular economy and thereby support economic growth.” The EC still needs to debate what a DPP will look like, as there are many options. Ariannee, a blockchain-based digital product passport infrastructure used by major fashion houses like Moncler and YSL Beauty, creates DPPs as NFTs (non-fungible tokens). These NFTs can be displayed anywhere a web browser works. Other options under the EC’s consideration are QR codes, barcodes, RFIDs, digital watermarks, NFCs, or Bluetooth tags. A DPP basically creates a “digital twin” of a product that stores all relevant transaction and sustainability information. The method of relaying this information needs to be easily accessible to the EC’s target demographic for the DPPs to be successful and easy to implement across all affected industries.
The idea that spurred the Digital Product Passport proposal was the EU’s concern with creating more circularity in order to stay within planetary boundaries while still reaping economic benefits. In an effort to move towards circularity, DPPs will serve as a tool to share product information from every stage of a product’s lifecycle, creating greater supply chain transparency and more informed consumer decisions. A product’s lifecycle can include a plethora of stages, but the six stages the WBCSDand Boston Consulting Group showcase are: raw material producer, brand/designer, manufacturer, distributor, (re)-User/Repair, Collector/Recycler.
Aside from creating obvious benefits to consumers and the European Union’s goals, businesses will also benefit from DPPs.With better supply chain visibility, businesses can make better sustainability decisions and more accurate sustainability claims, building trust with their customers and business partners. Businesses will also have to spend less time and money researching a product’s history to ensure the business conforms to sustainable practices and standards.
An essential impact of DPP implementation will be a positive effect on supply chain sustainability. With clearer supply chain transparency, businesses will be able to require higher sustainability standards along every step of their supply chains. Stakeholders will have easy access to data on energy use, carbon emissions, and general compliance, allowing businesses to ensure stakeholders implement greener production procedures. The domino effect of better supply chain transparency could be immense. Perceived benefits include a reduction in tax evasion, increased economic security, enhanced information sharing among the global supply network, and in today’s times – a better bottom line. It is trendy to care about the environment, meaning more and more consumers look for sustainably sourced products and ethical manufacturing standards. By using DPPs, companies will be able to attract those additional consumers with their increased product transparency.
So what’s the downside of DPPs? Currently, DPPs have yet to be implemented. This policy has a lengthy timeline that will span nearly a decade from its first proposal to its final stages of implementation. Companies and industries that may want to adopt DPPs early on may find it difficult to sift through the enormity of uncertainty the EU still has regarding key aspects of DPPs’ functionality. One such missing link is the lack of clear data requirements for industries outside of batteries. Other missing pieces include what format the data will be accessible by and what level of privacy will be given to whom (data security). This lack of information could be quite costly to companies attempting to implement DPPs early-on.
Despite the kinks, DPPs have great potential to create the future the EU envisions. More and more consumers are demanding increased levels of transparency from their favorite brands. Misinformation on the internet runs rampant, and people want to be informed. By creating a universal standardized method to verify a product’s lifecycle history, DPPs are, if nothing else, a giant step in the right direction.
Student Bio: Kaylie Scalze is a second-year law student at Suffolk University Law School. She is a staff writer on the Journal of High Technology Law and is a member of the Executive Board of the Business Law Association serving as the Social Media Chair. Kaylie received a Bachelor of Arts in Legal Studies from Suffolk University.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHTL or Suffolk University Law School.
