Digital product passports: Companies’ skepticism is slowing down the circular economy!

Digital product passports: Companies’ skepticism is slowing down the circular economy!

In Germany, everything is currently centered around a novel approach to promoting the circular economy: the digital product passport. This key tool, being developed in the context of the EU Green Deal, has the potential to fundamentally change the way companies and consumers interact with products. The digital product passport bundles information on materials, components as well as manufacturing and disposal processes. But how do companies actually feel about this project?

A current survey by the Federal Environment Agency and the Federal Network Agency among over 1,500 German companies shows clear skepticism towards the digital product passport. Around 50% of those surveyed see this as more bureaucratic effort and fear rising costs. Many small and medium-sized businesses are concerned about the additional effort that introducing digital product passports would entail. So far, only a few companies have digitally recorded their environmental impacts or shared corresponding data along the value chain, which further fuels the discussion about the DPP. Especially when it comes to the use of cloud services, only 25% of companies take environmental criteria such as energy efficiency or renewable energies into account. Clearly, there is still a lot of work ahead of us!

Why the digital product passport is important

The digital product passport is expected to become mandatory for products traded in Europe - with the exception of food, feed and medical products - in 2027. The idea originally came from the Federal Environment Ministry in Germany and was later adopted in the EU as part of the “Sustainable Products Initiative” (SPI). A real-world example is the 2021 design sprint, which led to the development of a model for the DPP, starting with the battery of an electric car.

The DPP is intended not only to improve the availability of information about the circularity of products, but also to create transparent traceability along the supply chain. Technologies such as QR codes and blockchain are used to make information about materials, chemical substances and repairability easily accessible. A first step towards DPP is taken with apps such as CodeCheck, Yuka and ToxFox.

Opportunities and challenges

The advantages of the digital product passport are manifold: It promotes sustainable business models, supports the identification of environmental risks and makes it more difficult to destroy usable products. In addition, a growing repair market is forecast, which could trigger a rethink in consumer society. Given critical raw materials and uncertain raw material supplies, the need for a circular economy in Europe is more urgent than ever.

The EU Commission takes a similar view and creates clear guidelines for sustainable products with the Ecodesign Regulation. Companies have to prepare for changes because the digital product passport could be crucial for increasing efficiency in their own processes and making optimal use of resources.

Overall, it shows that the digital product passport is not just a buzzword, but rather represents a central building block on the way to achieving a true circular economy. And even if the skepticism of many companies cannot be dismissed, it will be crucial to find practical and cost-effective solutions to increase acceptance and enable sustainable change. This is the only way to take the step towards a more environmentally conscious future for everyone.

For further information on the topic, you can read the detailed reports from the Federal Environment Agency and the Handelsblatt: Umweltbundesamt and Handelsblatt.