Imagine being able to, for any product sold in the EU, instantly access information about its origins, components, recycled content, carbon footprint, and repair options by simply scanning a QR code on it. This vision is becoming a reality sooner than you might expect, as Volvo recently introduced the world's first EV battery passport for its new flagship car, using blockchain technology to gather the necessary supply chain data. By February 2027, such battery passports will be mandatory for all EVs sold in the EU. And it will not just be about batteries that such information needs to be publicly available; the EU plans to introduce a Digital Product Passport (DPP) for nearly all products on the EU market. The EU plans to do so by means of their new Ecodesign for Sustainable Products Regulation (ESPR), which will go into force July 18, 2024. 

In this article, we will delve into the ESPR, its timeline, and requirements, with a special focus on the Digital Product Passport (DPP). Furthermore, we will explore the implications the DPP will have for businesses, the priority sectors it will initially impact, and how it promises to revolutionize supply chain transparency—all while propelling the EU towards a more sustainable, circular society.

THIS ARTICLE IS WRITTEN BY BART LADRU ([email protected]) AND CEM ADIYAMAN ([email protected]). BART AND CEM ARE BOTH PART OF RSM NETHERLANDS BUSINESS CONSULTING SERVICES WITH A FOCUS ON SUSTAINABILITY AND INTERNATIONAL TRADE.    

The ESPR in a nutshell

The Ecodesign for Sustainable Products Regulation (ESPR) is an important pillar of the EU’s Circular Economy Action Plan. It replaces the current Ecodesign Directive from 2009, and aims to significantly improve the circularity, energy performance and other environmental sustainability aspects of products placed on the EU market. For one, the ESPR allows setting performance and information standards, known as 'ecodesign requirements,' for nearly all types of physical products. These requirements cover aspects like energy efficiency, resource usage, recycled content, durability, reliability, repairability, and considerations for end-of-life such as reusability, recyclability, and waste management. 

Additionally, it addresses the destruction of unsold goods by requiring disclosure from large companies and imposing a ban on the destruction of certain product categories. Moreover, it promotes Green Public Procurement to encourage EU authorities to prioritize purchasing sustainable products. Finally, it will introduce the Digital Product Passport. A Digital Product Passport (DPP) is a digital file that provides detailed information about a product's life. Depending on the type of product, the DPP will require data on model, batch or individual item level. The product gets a unique identity linked to this data, making the product’s journey and sustainability clear. The EU Commission will run a public web portal where consumers can look up and compare sustainability information from the product passports. 

The goal and requirements of the DPP

The aim is to make product information clear and accessible, meeting the growing demand from consumers, investors, and other stakeholders for details about where products come from, what they are made of, and their environmental impacts. It will support products’ sustainability, promote their circularity and strengthen legal compliance. Information to be included in the DPP will be identified by the Commission, in close consultation with all relevant stakeholders, and will depend on the specific product in question. Digital Product Passports are not required yet, but they are expected to become mandatory for various products between 2026 and 2030. 

The next step in the process to implementation is the definition of technical standards for the DPP by the EU commission, which will be finalized by 31 December 2025. The DPP for batteries is expected to be (one of) the earliest product(s) to receive mandatory DPP requirements and will go into effect in February 2027. It is expected that the first product requirements as well as the DPP for other priority sectors start to apply in 2027/2028. The DPP will apply across all 27 EU member countries and cover many types of products, prioritizing those with high environmental impacts and big improvement potential. These include iron, steel, aluminum and textiles. 

The implications of the DPP

Companies with complex supply chains will need to understand and document each stage of their value chain to meet the requirements. Depending on the product type and where environmental impacts occur, various players in the value chain will need to provide or will utilize different information from the DPP.

For example, a raw materials producer might need to disclose sourcing details and environmental impacts like deforestation and emissions. Designers could detail the use of recycled versus virgin materials and resource consumption during production. Manufacturers might share data on water usage and waste generation, while repairers would contribute information on product maintenance and utilize repair instructions. Ultimately, end-of-life processors would require disassembly and recycling guidelines. Each stakeholder's input and access to the DPP is crucial to ensuring that circular principles are applied throughout the product's lifecycle.

Moreover, a sophisticated data infrastructure needs to be set up to allow for the collection and transfer of the continuous stream of information from multiple sources across the value chain regarding the model, batch or even individual items, and consequently linking it to the digital product passport.  However, once the system is all set up, it provides a wealth of valuable information. Companies will have access to a full digital record of a product's value chain, helping them optimize processes, reduce environmental impact, and ensure a more sustainable and efficient supply chain.

Forward Thinking

The EU is moving towards a sustainable and circular economy, mandating the collection of sustainability information across the supply chain through legislations like the Corporate Sustainability Reporting Directive (CSRD). This promotes transparency and accountability, pushing businesses to adopt responsible practices. The DPP is yet another such initiative and will empower stakeholders across the value chain with critical data, fostering informed and environmentally conscious decision-making. This transparency supports the creation of sustainable products and business models, driving innovation and market expansion. 

To effectively prepare for the DPP and adhere to the ESPR, companies—particularly those in prioritized sectors—should conduct a product life cycle assessment. Conducting such an assessment will help identify environmental impacts at each stage of the product’s value chain and can therefore help pinpoint areas in which the design and production process can be adjusted in line with circular principles.

RSM is a thought leader in the field of Sustainability consulting. We offer frequent insights through training and sharing of thought leadership based on a detailed knowledge of industry developments and practical applications in working with our customers. If you want to know more, please contact one of our consultants.