The Digital Product Passport – Transparent and Sustainable Supply Chains Powered by Blockchain

Finboot Team
October 25, 2022

The Digital Product Passport – Transparent and Sustainable Supply Chains Powered by Blockchain 

The Circular Economy Action Plan constitutes the Sustainable Products Initiative, which aims to implement a digital product passport. The passport is meant to facilitate supply chain traceability by collecting data about the value chain of the products. 

The digital product passport (DPP) will help the adoption of more sustainable practices by ensuring products are made using  renewable energy and free from hazardous chemicals. The passport will also help create a circular economy by making it easier to recycle products at the end of their lives. 

The DPP is powered by blockchain technology, allowing transparency and traceability throughout the supply chain. Here's a deeper look into the dynamics of digital product passports. 

What is a Digital Product Passport? 

A DPP is a digital record of a product's value chain. It collects data about the product's journey from raw materials to finished goods, including information on the energy used, the emissions generated, and the waste produced. 

The data is stored on a blockchain, a distributed database that allows for transparent and tamper-proof data sharing. The digital product passport can verify the sustainability of a product and ensure that it meets environmental and social standards. 

Why Should We Start Using Digital Product Passports? 

By tracking a product's entire journey from manufacture to purchase to disposal, we can gain a much more comprehensive understanding of its environmental and social impacts. Here are some reasons to implement digital product passports. 

1. Increased Transparency for both Consumers and Businesses 

At the moment, there's rampant mislabeling and de-facto greenwashing in the marketplace. It happens when companies make claims about their products that are not accurate or they downplay the environmental impacts of their product. 

Digital product passports would help increase transparency: businesses would be required to provide accurate information and consumers would be able to easily access this information to make informed choices. 

2. Improved Sustainable Practices in a Product's Lifestyle

DPPs would also help improve product recycling and waste reduction. By tracking products throughout their lifecycle, we can identify opportunities to recycle or reuse them at the end of their life. In addition, it would help businesses to design products with sustainability in mind. By understanding the full impacts of a product. 

● Carbon Footprint: With an average carbon footprint of 13 tonnes of CO2-e per person, the UK is one of the worst offenders when it comes to greenhouse gas emissions. Moreover, the EU produces 2.5 billion tonnes of waste annually. A digital product passport would help businesses and consumers understand the carbon footprint of a product and make better choices about their purchases. Consumers can learn how much of the product they're using contains recycled material, allowing them to calculate their environmental impact. 

● Water Footprint: By understanding the water footprint of a product, it will be possible to quantify one's environmental impact. A product with a large water footprint might be made with an excessive amount of cotton. To offset the impact of this product, the consumer might choose to purchase products made with recycled materials. 

● Material Grades: With greater access to information about raw materials, it will be easier to improve the quality of recyclable materials. Moreover, it might be possible to choose products made with certified sustainable products. 

3. Boost the Circular Economy 

DPPs would also contribute to the development of a circular economy, in which waste is designed out of the system, and products are made to be reused, repaired, or recycled back into the manufacturing process. 

DPPs enable businesses to track their products throughout the entire lifecycle. It would allow businesses to identify opportunities to close the loop and keep materials in use for as long as possible, and more importantly, it would allow businesses to sell products as a service rather than as physical objects. 

The benefits of a circular economy are numerous, and digital product passports would be a key step in implementing it. For instance, a report shows that a circular economy will create up to 700,000 jobs in the EU by 2030. 

4. Centralised Information Flow 

DPPs provide a centralised platform for all of the information. By mandating that businesses report certain information about their products, it will be simpler for the end-users to make informed decisions about their purchases and recycling habits. 

Moreover, it will allow businesses to share data about their products with each other and develop new ways to improve the efficiency of the manufacturing process.

Why Use Blockchain for Digital Product Passports? 

Blockchain technology refers to a digital ledger of transactions (DLT) distributed across a network of computers. For example, this technology can be used to create "digital product passports" that would provide a secure and tamper-proof way to track the journey of a product from its point of origin to the consumer and to end of life. 

There are many potential applications for blockchain technology in the food industry, including supply chain transparency, food safety and quality control. Here are some reasons to use blockchain in the supply chain and other applications of digital product passports. 

● Supply Chain Traceability 

● Reduces Compliance Costs 

● Accelerate Data Transfer Processing 

Many industries, such as food, fashion and automotive producers, require the sharing of product information between different parties. In these industries, blockchain could help to accelerate data transfer and processing. 

As blockchain technology uses cryptographic techniques, it would be very difficult for anyone to tamper with the data stored on the blockchain. Thus, it will help ensure the accuracy and integrity of product information - in short it provides immutable truth. 

Final Words 

A digital product passport has several benefits, such as supply chain sustainability, providing consumers with information about products' environmental and social impacts, and supporting more sustainable and ethical consumption. 

Digital product passports are still in their infancy, but several initiatives are underway to promote their use for supply chain transparency. It is hoped that the use of digital product passports will become more widespread in the future as DLT blockchain technology gains momentum. 

These passports will potentially find their applications in the fashion, food, and electronics sectors. Therefore, the benefits of using these passports must be clear to consumers so that they can make information-based choices about the products they purchase.