The Digital Product Passport – Just a Statutory Requirement or an Enabler for a Circular Economy?

The German coalition agreement between SPD (the Social-Democrats), Bündnis 90/Die Grünen (the Green party) and FDP (the Liberals) is a good example of how important the digital product pass is for implementing a circular economy: The agreement states that the German government plans to introduce digital product passports, support companies with the implementation process, and uphold the principle of data minimization, making it clear that digital product passports are viewed as part of a national circular economy strategy. In its strategy papers entitled “A European Green deal” and “Circular Economy Action Plan,” the European Commission identifies the digital product passport as an essential tool for developing an environmentally friendly and resource-efficient economy. Clearly, we can expect these political declarations of intent to eventually evolve into genuine legal requirements. As we head into 2022, the new EU Batteries Regulation is likely to be the first example to set a precedent. Yet even beyond the political sphere, the topic of developing a circular economy is gaining momentum. In line with their sustainability strategies and in particular the focus on sustainability within supply chains, companies are paying much more attention to sustainable procurement, and using sustainability indicators as award criteria. According to the latest “Global Sustainability Study 2021,” sustainability is also a key factor in purchasing decisions for around three-quarters of private consumers in Germany. With these things in mind, it is easy to create a relevant business case for providing sustainability data in a transparent way.

 

The digital product passport plays a key role in all of these discussions because it contains a wealth of data about a product and is continuously updated over the product’s life cycle. Material master data, material composition data, sustainability data such as life cycle CO2 emissions, utilization data such as disassembly instructions, and safety information can all be recorded, providing a complete picture of a product that is useful to various internal and external user groups. Typical internal stakeholders primarily include members of Compliance, R&D or Business Development teams who need the data to fulfill regulatory requirements, optimize product development or adjust the company’s strategy. External stakeholders primarily include suppliers who must disclose their own data and, more importantly, wish to use their sustainability credentials as a selling point. The data is also useful to customers who are trying to make sustainable purchasing decisions, repair companies who aim to extend the product life cycle, and remanufacturing or recycling companies who benefit at the end of a product’s life cycle. In principal, a digital product passport can be created for any type of product but we can assume that this electronic document will initially be established for products that require a lot of resources and energy to produce, and that have a highly complex material composition. High-voltage batteries installed in electric vehicles are a good example, and one that is now subject to the EU Batteries Regulation.

 

All of this sounds incredibly positive and many companies are keen to take action but making progress is currently very difficult. Political institutions may have this issue on their agenda but a concrete definition of standardized requirements is yet to materialize. This ambiguity is problematic because creating a digital product passport requires companies to combine, aggregate and then deliver user-centered data from various sources. Doing this within your own company is no easy task since not all of the data is readily available – and this is especially true of sustainability data. When you start gathering data from further afield, this task becomes incredibly challenging. Many companies are therefore calling for a shared approach to developing a standard for digital product passports and are already working on specific proposals. After all, clarity regarding expectations is the only way to ensure that their efforts are productive.

 

Despite this unsatisfactory situation, any company can still take meaningful action right now. Every business, but especially small and medium-sized enterprises, needs a lean and functional implementation concept to manage the effort that goes into collecting and aggregating data. We therefore recommend that you forge ahead with your initiatives for implementing a digital product passport. We suggest using our seven-stage process model to structure your activities:

  1. Needs analysis
    Analyze relevant current and future legal requirements and use your findings to identify functional and non-functional requirements for your digital product passport.
     
  2. User centricity
    Identify the data requirements of your relevant user groups through interviews, user journey analyses, and hypotheses that you plan to test. Establish use cases, consider the potential impact on your business case, and define relevant metrics. Validate your assumptions through discussions with your user groups.
     
  3. Concept
    Based on the insight from interactions with your user groups, design the ideal version of your digital product passport. Create a data model, architecture, and intuitive user interfaces. Identify existing data sources and attributes, and find a suitable implementation environment.
     
  4. Pilot
    Once you have finished the concept for your digital product passport, launch a pilot based on your findings and hypotheses. Use an iterative process that allows you to incorporate different data sources, aggregate the data, and perform multi-stage technical testing. Compare approaches and technologies using qualitative and quantitative analyses.
     
  5. Implementation
    Based on the results from the pilot, optimize specific technical elements of the digital product passport, embed it in your IT infrastructure, and make it available to the first user groups.
     
  6. Scale
    Develop a roadmap for scaling your digital product passport. Identify platforms, consortia, and interdisciplinary partnerships that will help you. Analyze additional use cases for your digital product passport and harness the resulting potential to optimize your business cases.
     
  7. Operation
    Identify a suitable long-term operating model: Whether you use your own corporate infrastructure, cloud platforms, or models from third-party providers such as MHP, consistent reporting and a continuous improvement processes are essential for sustainable operation.

 

Please contact us if you are interested in discussing the potential of and implementation options for digital product passports at your company!

Infos on the Blogpost

Published on: 04.01.2022
Authors: Paul Matausch, Katarina Preikschat, Nourhan El Mogy, Simon-Alexander Appel

More about the Author


Paul Matausch
Manager | Customer Products & Services

A “Better Tomorrow” is not possible without...:

  • Self-reflection and innovation
  • Committed and motivated employees
  • Diversity

I am passionate about…:

  • Measurable sustainability

Connect: LinkedIn

More about the Author


Katarina Preikschat
Senior Consultant | Data Transparency

A “Better Tomorrow” is not possible without…:

  • Solidarity with and respect for everyone around the world
  • Trust and understanding for the shared “we” – less of the central “I”
  • Digitalization, data-driven business and innovative technologies like blockchain

I am passionate about…:

  • Data driven optimization

Connect: LinkedIn

More about the Author


Nourhan El Mogy
Consultant | Data Transparency

A “Better Tomorrow” is not possible without...:

  • Openness to new ideas and the courage to experiment
  • Collaboration and partnership
  • A sustainable approach to problem solving that also creates value

I am passionate about…:

  • Sustainable innovative mobility

Connect: LinkedIn

More about the Author


Simon-Alexander Appel
Consultant | Customer Products & Services

A “Better Tomorrow” is not possible without...:

  • Seeing the big picture
  • The courage to make systematic change
  • Sustainable innovation

I am passionate about…:

  • Making a genuine impact

Connect: LinkedIn

Share in Social Networks


back to all blogposts