Preparing for the EU’s Digital Passport - Blog


As companies progressively lean toward more sustainable development and operations, acquiring comprehensive data on products’ sustainability levels was traditionally extremely challenging due to the inherent opacity of their supply chains. A recent Gartner report shows that at least 50% of companies are investing, slowly but surely, in technologies to boost supply chain visibility. In the past, the sheer complexity of supply chains and technological hurdles, such as a lack of interoperability and standardization, slowed supply chain digitization.


End-to-end traceability platforms, like OPTEL’s Optchain supply chain control tower, which is compliant with the EU’s upcoming regulation, have emerged as a viable solution for making supply chains more transparent and enabling companies to track and trace products from cradle to grave. That also means another 50%, including SMEs, haven’t considered digitizing their supply chains. And the report adds that less than 5% of all companies have actually started deploying supply chain control towers.

However, for businesses looking to export their existing or new products to the European Union (EU) within the next few years, they will likely no longer have a choice. The reason? Without the fearmongering, looming regulations with respect to the EU’s Digital Product Passport (DPP),   will mandate the digitalization and transparency of supply chains for all products entering the EU market.

Learn about Digital Product Passport (DPP)
Preparing for the EU’s Digital Passport - Blog


The European Union’s introduction of the Digital Product Passport (DPP) is set to launch a new era of transparency, circularity, and sustainability in global supply chains. The DPP initiative, central to the EU’s Circular Economy Action Plan and Ecodesign for Sustainable Products Regulation, will require that a company use digital tools to trace a product’s entire lifecycle. Its objective is to create integrated data flows so that businesses can respect the regulation’s requirement of being completely transparent about how their products are made.

At its core, the DPP is a digital dossier, containing comprehensive information regarding a product’s origins, components, environmental footprint, and end-of-life handling instructions. Every supply chain stakeholder, including consumers, can access the data through various means, whether through a traceability platform for the supply chain actors themselves or through QR codes for consumers.

In a nutshell, any business selling products in the EU will need to provide a product passport for each finished product, its components, and intermediary goods, with the onus on manufacturers, distributors and importers to ensure adherence to these rules.

This will have substantial implications for global value chains, requiring suppliers and manufacturers globally to gather and submit the necessary DPP information. The regulation will also stipulate that a certain percentage of each product be made from recycled materials, with restrictions on the amount of products that can be thrown away. This could also pave the way for other international regulatory bodies to consider adopting DPPs in the future.

Preparing for the EU’s Digital Passport - Blog


As broken down by the World Business Council for Sustainable Development (WBCSD), the EU anticipates implementing specific DPP regulations for initial product categories around 2026/7, with the aim to include the majority of products by 2030.

 While the specific priority for product groups to fall under the legislation remains to be officialized, the EU has nevertheless pinpointed which industries it will tackle first: batteries and vehicles, electronics and ICT, textiles, and plastics and chemicals, to name a few. Other industries will most certainly be defined in the upcoming months and years.

Worldwide Compliance Guide
Preparing for the EU’s Digital Passport - Blog


The DPP has transformative potential for future supply chains. Currently, global supply chains operate predominantly in linear models, focusing on a ‘take-make-dispose’ approach. The DPP initiative advocates for a shift towards circular supply chains, where products are designed for durability, reuse, remanufacturing, and recycling. The emphasis is on reducing waste and preserving value, which is both economically advantageous and environmentally necessary. It stands to reason that the EU’s DPP regulation will become a digital enabler to address pressing environmental challenges, such as the transition to renewable energy sources, low recyclability of many products, e-waste, supply constraints of precious resources, and more.

Equally vital is the role the DPP will play in advancing circularity, the concept of keeping resources in use for as long as possible, extracting maximum value before recovering and regenerating products at the end of service life. The DPP enhances this process by providing detailed information about materials, components, and repair instructions, enabling efficient recycling, revalorization, or responsible disposal.

There are also growth opportunities for companies and consumer benefits.

Businesses can scrutinize their supply chains, pinpoint inefficiencies, and look for improvements. They can also leverage the data to better design products with more sustainable practices and for circularity, which in turn could allow them to adopt a first-mover advantage, charge a price premium and elevate customer loyalty. Furthermore, thanks to data transparency, companies will create better shareholder value and meet the evolving ESG requirements of investors and other funding entities.

Consumers, on the other hand, will receive valuable insights into the products they purchase, knowing their environmental impact and origin. More informed decision-making will inevitably cause a shift in the market: with consumers allocating their dollars to companies that are taking concrete actions towards sustainability (and proving it), laggards will lose out on their competitive edge. In essence, DPP promotes an open, transparent market, fostering trust and accountability.

Preparing for the EU’s Digital Passport - Blog


Despite the fact that the EU’s DPP promises to pioneer the world toward circularity and reduce planetary exploitation, the legislation is still in its nascent phases. Nonetheless, companies need to start planning today: adapting to the EU’s DPP requires a robust strategy, technology investments, and a paradigm shift in the way they view their supply chains.

First, companies must familiarize themselves with the DPP’s technical requirements and legislative framework. OPTEL recommends assigning a team responsible for DPP compliance in order to safeguard their business in the EU. This team would remain on top of the ever-evolving changes and dates with respect to the regulation.

Due to ongoing supply chain challenges, organizations should also reassess their product design strategies to identify quick and long-term gains regarding resource efficiency and circularity. Supply chain partnerships, both upstream and downstream, must also be evaluated to ensure that all stakeholders have the same vision or scout out new suppliers.

Preparing for the EU’s Digital Passport - Blog


Investing in the right traceability technologies will be key. To lower costs and minimize operational disruptions, it is recommended to find a turnkey platform that not only allows a company to trace each stage of its value chain, from raw materials to consumption and beyond, but also one that can track and trace your carbon footprint. Two-for-one solutions eliminate the hassles associated with both digital product passports and other regulations for Scope 1, 2 and 3 greenhouse gas (GHG) emissions.

In conclusion, the EU’s DPP initiative is a game-changer for supply chains, promoting transparency, enabling circularity, and forging the path towards a sustainable future. By preparing adequately for the DPP, companies can not only meet regulatory requirements but also leverage the benefits of this transformative initiative, creating a positive impact for their bottom lines—and the planet.

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