Impacted companies need to start thinking about technology strategies in order to comply with the coming EU Digital Product Passport mandate.
By Megan Brewster
Set to impact any company worldwide that sells products in the European Union, the fast-approaching Digital Product Passport (DPP) mandate is a first-of-its-kind regulatory framework designed to create transparency around product information and accelerate the transition to a circular economy.
Under the new DPP regulations, most end-use and intermediate products sold in the European Union will require a DPP by 2030. The DPP is a type of virtual label with information about a product’s origin, materials used, manufacturing processes, recyclability and more. By providing details about a product’s journey and environmental impact, the goal is for DPPs to empower consumers to make more informed purchasing decisions and pave the way for a greener, more ethical future. This foundational framework is expected to become the information backbone of the global circular economy.
Any company that sells products in the European Union will be impacted by the new DPP regulations, including U.S. companies, which exported more than $350 billion in goods to the European Union in 2022 alone. However, even with the best intentions, many of these companies lack access to the information across their supply chain that is required by this legislation. While mandates directly impacting manufacturers and retailers are still a few years out, it is important to start preparing now to stay ahead of the regulatory curve.
What Is A Digital Product Passport?
A DPP is a digital record containing key information related to a product’s composition, origin and lifecycle. Under the forthcoming legislation, companies selling products in Europe will need to collect and share detailed data on an item’s verified sustainability attributes via DPP, including information about the materials used, manufacturing processes and recyclability. Most products sold in the European Union, from tires and building supplies to clothing and laundry detergent, will require this attached identifier.
To understand the DPP legislation, it’s important to understand the broader regulatory framework that underpins it. The EU Green Deal, set forth by the European Commission in 2020, is aimed at reducing emissions by 55 percent and making the European Union climate neutral by 2050. As part of this deal, the commission brought forth the Eco-design for Sustainable Products Regulation (ESPR). Set to reshape the way products are manufactured, distributed, and reintegrated into a circular economy, the ESPR is a broader framework, delegating the responsibility for establishing granular rules to future regulation through delegated acts. While some delegated acts are set to focus on specific product categories, others will expand on technical and operational elements, such as rules around DPPs.
Who Will Be Impacted Under DPP Legislation?
In this new regulatory landscape, the responsibility for ensuring compliance with DPPs extends beyond the borders of the European Union. Not only will finished products sold in the European Union need to adhere to DPP regulations, but also any components, materials, or semi-finished goods involved in their production, regardless of their origin.
This will dramatically reshape global value chains, necessitating suppliers and manufacturers worldwide to gather and submit the DPP data for their products destined for the European market.
While specific data likely will vary by product category, product sellers will be required to report on the following under DPP legislation:
- Potential for repair, maintenance, refurbishment and upgrades;
- Presence of harmful substances;
- Resource consumption or efficiency;
- Recycled materials content;
- Reusability, remanufacturing and recycling potential;
- Environmental impacts, including carbon footprint; and
- Anticipated waste generation.
As identified by the European Commission, several priority categories — for both finished end-use products and intermediate materials and components — are among the first required to create DPPs for goods produced. These priorities include sellers of batteries, textiles — garments and footwear — iron and steel, aluminum, furniture — including mattresses — tires, detergents, paints, lubricants, chemicals, and electronics. The commission also has stated that it maintains the power to extend the list of currently prioritized categories in the future to include products such as toys, cars and construction-related materials.
Among those set to be the most impacted by the mandate in its earliest stages of rollout are textile and apparel companies, retailers and manufacturers. A study by the Panel for the Future of Science and Technology (STOA) — a group of Members of the European Parliament — surveyed more than 80 stakeholders to examine the benefits and challenges of DPP deployment within the textile industry. The textile and fashion sectors already face a number of critical challenges including negative impacts on natural resources as a result of fast-fashion, shortages of raw material, rising labor, energy, and water costs, as well as controversies surrounding practices within the textile industry. Against the backdrop of these challenges, the STOA study examined where DPPs will drive the most value in the industry.
STOA found that the consensus among surveyed stakeholders is that DPPs are a positive step towards sustainable product lifecycle management and increasing the circularity of textiles in the European market, and beyond. However, the study also found significant challenges among respondents regarding deployment. Among the top challenges reported in making the DPP feasible within the textile industry are ensuring access for all stakeholders of circularity, including companies that do not have the complex technologies necessary to digitize their supply chains. In addition to costs, data security, and potential impacts on global supply chains and businesses, the need for harmonization of regulations, market surveillance and traceability also were reported concerns. These challenges highlight the need for a unified framework and technical standards to help companies navigating the new DPP mandate.
Meeting Compliance Requirements Using RAIN RFID
Alongside reporting requirements, the DPP framework sets out technical standards regarding how data should be presented and managed. To provide this DPP information, a physical “data carrier” must be attached to products. This data carrier — potentially taking the form of a QR code; a battery-free, wireless RAIN radio frequency identification (RFID) tag; or another identifier —will link the physical product to its digital twin in the cloud, giving brands and consumers full visibility into data regarding materials used, ownership history, and instructions on recycling or proper disposal.
RAIN RFID, a passive, battery-free wireless technology that relies on radio frequency identification to connect items directly to the internet, is a strong candidate to be part of a DPP compliance solution. The technology already is widely used by retailers and logistics companies for inventory management, product authentication, shipment verification and more. This “wireless barcode” connects to detailed information regarding the specific model, batch, and individual unit through a machine-readable format that can be both maintained and easily updated.
Combined with QR codes, RAIN RFID tags would provide a secure, consumer-friendly approach for companies to meet critical requirements under the DPP legislation today. RAIN RFID systems enable businesses to identify, locate, authenticate, and engage with every product tagged with a RAIN RFID tag providing real-time insights. Alongside compliance requirements, companies gain additional benefits from the adoption of RAIN RFID into their everyday operations. Offering item-level tracking throughout the full supply chain, RAIN RFID deployment is already helping businesses to solve their most forefront challenges including counterfeiting, inventory management and overstocks. The technology is also helping businesses modernize operations, supporting circular business models, and driving sustainability initiatives, which will ensure businesses meet the fast-approaching guidelines under the European Union’s DPP mandate. With RAIN RFID readers designed to be embedded in a variety of forms — including small, hand-held form factors — it’s not hard to envision a not-too-distant future where consumers also are able to read RAIN RFID tags using their smartphone, meaning anyone can read the information embedded on tagged products’ DPPs.
Next Steps Ahead Of The Rollout Of The DPP
With the first DPP deadline approaching in July 2024, it is crucial for impacted parties to begin preparing to stay ahead of the regulatory curve. The Ecodesign for Sustainable Products (ESPR) legislation — which creates a framework for DPPs — is planned to be ratified into EU law in July 2024. Following this, in December 2025, European standards organizations CEN/CLC/JTC24 will deliver harmonized standards for the DPP system. Two key dates in 2026 include the publication of the delegated act for textiles — in January — and iron and steel products — in April. These dates start the clock for respective compliance deadlines 18 months later, mandating a DPP for all products in these categories sold in the European Union — July 2027 for textiles and October 2027 for iron and steel products. In February 2027, the Battery Passport regulation is set to take effect, requiring a DPP for all transport, industrial, and electric vehicle batteries placed on the EU market.
Positioned to redefine industry standards, the rollout of the DPP over the next three years will improve transparency and accountability into the overall environmental sustainability of products worldwide. As the first big-mover legislation of its kind, the European Commission’s DPP is already setting a precedent that is inspiring similar initiatives globally.
In the United States, for example, the American Apparel and Footwear Association (AAFA) is pushing Congress to revise labeling regulations to incorporate the use of digital labels. This signals the EU’s model may become the global standard, requiring companies worldwide to make DPP compliance a strategic priority.
In efforts to mitigate trade barriers for greener products and lower costs for sustainable investments and compliance, the European Union has set out to develop the DPP mandate in an open dialogue alongside international partners, while working with partner countries to assess potential impacts globally. Impacted companies should start taking steps now to ensure they have the right technology strategies in place to prepare for the DPP. The deployment of RAIN RFID as part of a DPP compliance mix means that businesses can take full advantage of its benefits, ensuring they’re meeting DPP mandates while solving key business challenges and driving new innovations and business value more broadly.
Editor’s Note: Megan Brewster is the vice president of advanced technology at Seattle-based Impinj, a provider of RAIN radio frequency identification technologies. Prior to joining Impinj, Brewster served as fellow and senior policy advisor for advanced manufacturing for the White House Office of Science and Technology Policy, where she supported the stand-up of the administration’s signature advanced manufacturing initiative.
2024 Quarterly Volume III
