Circular Economy and the Launch of the Digital Product Passport

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The circular economy is an alternative, regenerative model of production and consumption in which products are kept in use for as long as possible and are repaired, reused, or recycled when they reach the end of their useful life. The concept is gaining momentum as a sustainable alternative to the traditional, linear, take-make-dispose model of production and consumption. However, the concept has so far lacked a rigorous regulatory framework or set of standards.

As part of its commitment to advance the circular economy, the European Union (EU) is set to launch the Digital Product Passport (DPP). Once launched, this innovative tool will facilitate data exchange among stakeholders, promote transparency and traceability, and encourage businesses to make changes that align with circular economy principles. In this article, we explore how the launch of the DPP relates to the circular economy framework and highlight the potential impact on business practices.

The EU Ecodesign Regulation

The proposed EU Ecodesign for Sustainable Products Regulation (ESPR) will revise the existing Ecodesign Directive (2009/125/EC), which has been successful at phasing out the most environmentally damaging energy-related products since its launch in 2009. The ESPR sets mandatory requirements for the environmental performance of products placed on the EU market and aims to enhance the energy efficiency, durability, reparability, and recyclability of products. Due to enter into force in January 2024, the ESPR is expected to be implemented in phases, and will extend minimum sustainability requirements beyond energy-related products to a broad range of sectors. The rules set out under the ESPR aim to make sustainable products the norm on the EU market by ensuring that products are designed to be repairable, durable, recoverable, and free of hazardous substances. As part of the ESPR, the European Commission is also set to launch the Digital Product Passport initiative, which will facilitate the implementation of circular economy principles.

The Digital Product Passport

The Digital Product Passport (DPP) is an electronic document that contains product information from across the supply chain. The first of its kind, the DPP, when launched is expected to incentivise businesses to improve their environmental performance and design for circularity, by empowering consumers, businesses, and other stakeholders to make informed purchasing decisions by providing on-demand access to product-related information. For instance, consumers will have access to information about how long a product is expected to last or the extent to which it can be repaired.

Promoting transparency & traceability

Discussions are still ongoing regarding the DPP, specifically on issues relating to data requirements, access rights, and governance. However, once launched, it will enable products to be tagged, identified and linked to data supplied by and shared with stakeholders from across the supply chain. This level of transparency and traceability will empower consumers to make informed purchasing decisions, businesses to make informed procurement decisions, and regulators to monitor compliance with environmental standards, thereby advancing economic progress toward a more circular future.

Facilitating repair and reuse

The DPP will help the EU meet its circular economy goals by providing consumers and technicians with guidance on effective maintenance and repair procedures. By making this information readily available, it is hoped that products can be repaired and their lifetime extended so that waste is reduced, resources used more efficiently, and the need for virgin resources minimised.

Driving sustainable business practices

The launch of the DPP is expected in 2026 (when the first product groups will fall under its scope) with all products regulated by the ESPR covered by 2030. Once in effect, the DPP will have significant implications for businesses with a presence in the EU as it will incentivise products to be designed with circularity in mind, with an emphasis on durability, modularity, and the use of recyclable materials. By mandating companies to disclose their environmental performance data, the passport will provide businesses a platform on which to differentiate their products in the market, thereby rewarding those that are actively improving their sustainability credentials. Another anticipated change is the adoption of product-as-a-service business models such as leasing options so that responsibility for repair or refurbishment remains with the manufacturer or retailer throughout its life cycle.

Summary

The launch of the DPP marks a significant step towards advancing the circular economy agenda and promoting sustainable practices. By providing transparent and comprehensive product information, the passport will empower consumers, businesses, and regulators to make informed decisions. As the circular economy gains momentum, the DPP will play a pivotal role in fostering a more sustainable and resilient future for businesses and societies alike by driving the transition towards resource efficiency, waste reduction, and extended product life cycles.

What should you do to prepare

Although the DPP will not be launched until 2026, consumers and NGOs are already demanding that companies place greater emphasis on the values of the circular economy – and are calling out companies who don't. Businesses with the foresight to incorporate sustainability considerations into the design of their products (following the Safe and Sustainable by Design principles) will be best positioned when the revised ESPR regulation and accompanying DPP come into effect. Our team of experts can review your portfolio and perform life cycle assessments (LCA) to help you stay ahead of the competition and the new regulations. LCA provides visibility over waste streams and environmental impacts and enables targeted environmental improvements to be made by highlighting hotspots and revealing resource-intensive or inefficient processes.

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