Digital Product Passport marks a pivotal shift for manufacturers towards informed decision-making, nurturing increased product quality and sustainability
In the ever-evolving landscape of fast-moving consumer goods, skepticism prevails, with 75% of consumers expressing reluctance to trust environmental claims (GFK). This skepticism is unsurprising, given that 40% of these claims lack supporting evidence (European Commission).
Responding to these challenges, the European Union leads the way in innovation with the Digital Product Passport, celebrated as a game-changer for industry standards. This initiative, a digital-based supply chain compliance tool driven by product and consumer rights regulations, aims to enhance environmental sustainability, foster circularity, and empower market surveillance authorities through digital inspections and data collection.
At its core, the Digital Product Passport marks a pivotal shift for manufacturers towards informed decision-making, nurturing increased product quality and sustainability. The passport aspires to establish cross-sectional value chains, implement automated resource efficiency strategies, and open new markets for exploration.
Consumers are poised to reap significant benefits from the Digital Product Passport, armed with insights into repair guides, product reuse, and the entire product lifecycle. This empowers them to make informed decisions, considering a product's environmental impact, while providing protection against counterfeit and dangerous products.
The regulatory groundwork for the Digital Product Passport is already underway, with the Ecodesign Sustainable Products Regulation (ESPR) scheduled for enactment in 2024. Following this, delegated acts specific to product categories will define contents and specifications, with the first passport enforcements anticipated in 2027. This places the responsibility on manufacturers to gather and consolidate supply chain information.
Recent revelations from a U.S. Customs sample, as reported by Reuters, uncover a disconcerting reality: 27% of textiles tested contained cotton from Chinese forced labor regions, despite regulatory efforts. It is crucial to note that manufacturers, grappling with estimated losses of 9% of annual revenues due to interorganizational fraud (IEEE), may not harbor malicious intentions.
Recognizing the challenges faced by the Digital Product Passport issuer, especially with outdated, paper-based processes, is essential. Manufacturers lack the prerequisites across the supply chain for trusted information. Currently, even manufacturers rely on suppliers for roughly 50% of the required information, with 62% still relying on paper for data exchange. Only 31% are estimated to be ready for managing related data effectively, according to the BDI IWW report 2023 on the digital product passport.
Consequently, the official digital product passport documentation so far lacks the foundation for content validation, requiring highly manual (and costly) but mission-critical "phygital" information governance and verification processes from manufacturers. This poses a significant challenge to manufacturers, maintaining a high level of remaining third-party risk for brand reputation, and requiring them to prove sufficient risk mitigation efforts to avoid fines in case of legal disputes.
To fortify the integrity of the Digital Product Passport and trust in manufacturers, Cryptar steps in, collaborating with the TIC industry. Cryptar's protocol for cryptographic data lifecycle documentation ensures tamper-proof datasets with version control, complementing the TIC industries' deep expertise in regulations standards and conformity assessments to create officially validated product data. Thereby, setting the stage for Digital Product Passport supplier integration services. The goal is enabling a seamless, verifiable product information exchange by 2026, eliminating the need for organizational upheaval while ensuring compliance with forthcoming regulations.
As we navigate the evolving landscape product information, the Digital Product Passport emerges as a beacon of change, promising transparency, sustainability, and a renewed sense of trust. Stay tuned for your opportunity to become part of this transformative journey as we are expanding our collaboration for additional participants soon.
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