Digital Product Passports (DPP) are a paradigm shift in how a company approaches product lifecycle management and can be applied to multiple industries. This especially holds true as we move into the Web3 era where due to decentralized networks and virtual experiences, DPPs find new dimensions of application.
What are Digital Product Passports?
An initiative of the European Commission, DPP is the digital twin of its physical product and collects and shares product data throughout its entire life cycle. It focuses on making information accessible to the end user by recording product data and thus improving a product’s sustainability, environmental, traceability and recyclability attributes. As per the European Commission, DPPs are aimed at equipping consumers with detailed and transparent data regarding their purchases. This initiative aims to foster sustainability and circular economy practices while also simplifying the process for regulators to access and verify product details to ensure compliance with the law. The industries which have been prioritized for adoption of this technology are batteries & vehicles, textiles, electronics & ICT, furniture, plastics, construction and chemicals. A few industries, such as food, feed and medicinal products are exempted from having to implement DPPs. The timeline for implementation looks like this:
Important elements of DDPs
- Physical Identifier on the product: The product tends to feature a QR code, barcode or other technology such as NFC tagging, which upon scanning enables the customer to access the DPP via a smart device application. For instance, scanning a QR code on a clothing item’s label would direct a consumer to its Digital Product Passport, revealing information about the product’s sustainability credentials, raw material sourcing, and even recycling instructions.
- Data Collection: DPP holds tremendous potential for various use cases and opportunities but is being utilized mainly for these data categories right now:
- General: mainly used to verify authenticity, this category involves basic details like the product ID, batch numbers, manufacturing dates, locations etc.
- Sourcing: These cover the types and origins of materials used in a product, and also focus on how ethically the material was sourced.
- Environmental Impact: They provide information on the product’s carbon footprint and CO2 emissions throughout the entire life cycle and actual product usage.
- Ownership: DPPs track the ownership history of a product, including how long each person owned it and a record of any transfers. This is extremely useful in the resale industry.
- Repairs: Useful in the luxury industry, this records when, where and for how much the product was repaired.
- Usage Instructions: This ensures proper handling and end-of-life management of the product by detailing instructions for use, maintenance, repair, recycling, and disposal.
- Data Storage and Access: This involves establishing a robust platform that guarantees trust, confidentiality, and straightforward access to data. To make DPP data storage more efficient, a DPP database could already be created before entry into the EU market. In the lifecycle stages, the company should be able to enter data directly into DPP to facilitate data sharing and easy accessibility.
Benefits of Digital Product Passports
Benefits to Businesses
- A report by BCG details how the company can unlock investment synergies by avoiding future IT costs, duplication in data collection efforts, and extensive process redesign by anticipating DPP requirements in tech and data infrastructure.
- Increases Consumer Trust by offering consumers detailed insights into the product life cycle, that leads to higher customer retention and loyalty.
- Aid in managing risks related to supply chain disruptions and price volatilities, thanks to enhanced transparency in raw material usage and product design.
Benefits to Consumers
- Consumers can reduce their carbon footprint by choosing brands who are sustainable based on information found in DPPs.
- Consumers can easily identify greenwashing companies by identifying whether they are being purposely misled and validating a company’s claim in relation to their green initiatives.
- Buyer can maximize product value by assuring that their products are legitimate – enabling them to avoid faulty or forged goods. This improves customer satisfaction, especially in the resale and luxury market.
Use Cases in Web3 of DPPs
Web3 is all about virtual goods and assets. DPPs can authenticate these virtual assets, ensuring rightful ownership and provenance. DPPs can provide details about the history of the virtual assets and the associated brand, enriching user experience.
The Aura Blockchain Digital Product Passport
Aura Blockchain Consortium was established by leading luxury players LVMH, Mercedes-Benz, OTB Group, Prada Group and Cartier, part of Richemont. The idea behind the non-profit is to have a single, innovative solution to shared challenges of communicating information on authenticity, responsible sourcing and sustainability in a secure, digital format.For this, they have developed a DDP which matches a product ID to a client ID, and thus allows consumers to trace a product’s journey and verify its authenticity at every stage of the value chain. Their DDP is aimed at unlocking Web3 utilities and functionalities by offering brands a comprehensive framework for navigating EU regulations and local directives while allowing the flexibility to tailor their approach to their unique desires and storytelling.
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