The EU's Digital Product Passports & Distributed Ledger Technologies

The Problem: A Lack of Traceability

When you buy a product, whether it be as simple as an apple from a local farmer's tree or as complex as an Apple from the fancy downtown boutique, what do you know of its origins? Sustainable sourcing of raw materials, ethical labor practices, and environmentally-conscious packaging and shipping all contribute to the growing list of considerations that the modern consumer asks of manufacturers and retailers. A 2023 survey by the European Commission found that 73% of respondents say the impact of the product on the environment is 'very important' or 'rather important' when making a purchasing decision. The demand for detailed, consumer-accessible sustainability information is clearly there -- and businesses will soon be required to provide it in order to continue selling to EU customers.

The EU's Solution: Digital Product Passports

A 2020 study published by the European Commission found that over half (53.3%) of environmental claims were potentially misleading. Without verifiable data, companies can claim all sorts of environmental benefits without sufficiently backing them up. This lack of transparency also extends to recycling -- if we don't really know what a product is made of, we can't recycle it properly. Digital Product Passports (DPPs) are the EU's answer: digital records that include a plethora of item-level information about products throughout their lifecycles. Consumers could learn about the ethical labor practices of their tiramisu's coffee farmers, bring up an authenticity certificate for a designer watch, or find out how best to recycle their bluetooth headphones.

Legislations Behind DPPs

DPPs are part of a wider effort from the EU to promote sustainability and a circular economy. The European Green Deal is the EU's flagship sustainability policy, aiming to make the EU climate neutral by 2050. Under that umbrella, the Circular Economy Action Plan (CEAP) promotes circular economy processes through targeting how products are designed and keeping resources within the EU economy. The Ecodesign for Sustainable Products Regulation (ESPR) falls under the CEAP and is the key legislation requiring products sold in the EU to include a Digital Product Passport. DPPs themselves are documents that follow products throughout their lifecycle journeys, containing product name, model, manufacturing date, materials used, ownership history, repairs, sustainability data, and carbon footprints.

• European Green Deal: Climate neutral EU by 2050
• Circular Economy Action Plan: Sustainable product design
• Ecodesign for Sustainable Products Regulation: Mandates DPPs
• Digital Product Passports: Lifecycle data for every product

DPPs & Distributed Ledger Technologies: An Ideal Match

This is a massive amount of data that needs to be accessible to businesses, consumers, and governments alike -- not only accessible, but trustworthy. Distributed ledger technologies (DLTs) offer the ideal technical solution. The single biggest benefit is that distributed ledgers are immutable by design: once data is recorded, it cannot be altered or tampered with. If a mistake is made, a correction must be appended to the original entry, ensuring maximum reliability and transparency. Furthermore, DLTs offer very fine-grain access controls, meaning that each party only has access to the portion of the raw data that they need. Depending on the implementation, businesses can also seamlessly integrate DPPs into existing ERP/PIM/PLM systems by means of a basic plugin.

The key advantages of using distributed ledger technologies for digital product passports include improved transparency, less fraud, improved compliance, sustainability, supply chain efficiency, and consumer empowerment. -- EUBlockchain Observatory & Forum, European Commission

Examples of DPP & DLT Integrations

Despite DPPs being a relatively recent development, there are already numerous examples in the wild. MyLime uses DLTs for DPPs for its bicycles to track production, transportation, and sales -- becoming the first company to launch a vehicle equipped with an NFT. Coach is using DPPs to allow consumers to authenticate products for second-hand resale, with each product linked to detailed information about materials and care services that can be automatically loaded into resale platforms. Scantrust enables consumers to have in-depth insights into the traceability data for everyday goods like coffee and skincare products through QR codes unique to each individual package.

Challenges & Conclusions

Introducing distributed ledger technologies as a solution for digital product passports is not without its challenges. One key obstacle is interoperability: different DLT and DPP platforms may not be fully compatible, making seamless data exchange difficult. Another challenge is securing buy-in from all stakeholders, as businesses across the product lifecycle may be reluctant to commit to full transparency due to cost, complexity, or other concerns. Nevertheless, sustainability regulations are coming and they're here to stay. This is a massive opportunity to streamline preexisting B2B workflows and improve consumer confidence, all while genuinely doing some good for our planet.