Looking at Europe: DPPs Have Manufacturing Countries Fumbling in the Dark

Luca Boniolo, Senior Consultant with Ohana Public Affairs which specialises in sustainability strategies for the EU, points out: “Every company that sells products in the EU that are covered by ecodesign requirements will need to place a DPP on their products, regardless of where they are based. The same obligations apply for EU and non-EU companies. It is therefore important that non-EU companies follow the discussions and development around the DPP and ecodesign to be ready to comply once the requirements enter into force. At this stage, we recommend following the work of the CIRPASS consortium.”

CIRPASS (Collaborative Initiative for a Standards-based Digital Product Passport for Stakeholder-Specific Sharing of Product Data for a Circular Economy) is an 18-month project, and will respond to the European Commission’s call on creating a clear concept of the DPP (Digital Product Passport), defining a cross-sectoral product data model with demonstrated benefits for the circular economy as well as developing roadmaps for its deployment. The project got under way in October 2022.

Holly Berger, Marketing Director of Switzerland-based traceability platform Haelixa, emphasises on the need to take the traceability route. She says that using DPPs in Europe will create a literal passport for the product—meaning that companies will have proof of their value chain. The first step is understanding the supply chain—from source to finished product. After that, they need a tool mark and trace the fibre journey. Though the DPP only requires digital, we know that there can be gaps in the information chain, which allows for greater risk. Ideally, a company is using a physical traceability tool, like Haelixa’s DNA marker technology, to attach information to the fibre.

All good, but how are DPPs going to affect the trade process itself. Will trade see a slowdown? Can the issue of nitty-gritties create a chaotic situation till there is a shakeout? Will we see teething problems, or will those problems persist over time?

Herzog believes whether there is a slowdown or not will be in the hands of the lawmakers. “We see how immature legislations can actually hamper trade with the Uyghur Forced Labor Prevention Act. If the legislation leaves insecurities for executing authorities and companies, it might create a slowdown or re-direction of goods because Europe becomes a complicated player.”

DPPs are expected to have a significant impact on trade, particularly in the fashion industry, according to Rodríguez. “While there might be initial adjustments and challenges during the transition phase, companies that do not have their DPPs in place may face potential slowdowns. The implementation of DPPs is likely to become a crucial requirement for trade partners. Companies without DPPs may face obstacles in terms of compliance, market access, and consumer trust, potentially leading to delays or limitations in trade activities.”

Boniolo puts in a word of caution: “Customs authorities will be tasked to check that products covered by ecodesign requirements do have a DPP. If companies don't have their DPPs in place, then they cannot export products to the EU. There might be trade disruption depending on the level of awareness of and readiness to comply with the law.”

Berger thinks, in theory at least, with DPP, the efficiency of trade should improve. “The question remains about how the DPP will be linked with import/export agencies for countries outside the EU—whether they will be automated or not. The use of DPP is a big conversation in the largest markets in the world, but there are too many questions to know when countries will be held accountable. The important message is that a conversation is happening broadly and the EU should help set precedence for other regions.”

And that’s where we will end: on the need for questions to be answered.