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The first step toward business compliance amidst the ESPR’s DPP mandate: The data minefield

Lars Rensing, CEO of Protokol, explores the measures businesses can take to prepare for compliance with ESPR’s Digital Product Passport (PPD) mandate, enhance sustainability, and strengthen operational resilience.

Lars Rensing, ProtokolThe Ecodesign for Sustainable Products Regulation (ESPR) is no longer news to businesses operating in the EU market. However, as the legislation's role in promoting circularity and sustainability in the EU becomes widely known, many businesses in the early stages of preparation for compliance are wondering where best to focus their efforts.

As part of the ESPR’s movement, the Digital Product Passport (DPP) mandate remains a core focus of the legislation and will impact a multitude of businesses, and industries. While some businesses are keen to make headway, navigating the logistics of this mandate and enacting the initial steps towards compliance remains a challenge.

A key starting point is identifying and validating the required data for compliance. This process can be more challenging than expected, making early preparation even more essential to ensure the transition remains seamless. Moreover, although specific requirements pertinent to each industry are yet to be announced (via delegated acts), conducting these steps early can significantly simplify the compliance journey for all businesses.

The road to a circular economy: The legislation and its implications

As already noted, the role of the Ecodesign for Sustainable Products Regulation (ESPR) has been growing steadily among EU businesses in recent months. As a cornerstone of the EU’s Circular Economy Action Plan (CEAP), the ESPR aims to revolutionize product sustainability by setting new standards for durability, energy efficiency, repairability, recyclability, and the use of recycled materials while minimizing harmful substances. In simple terms, its aim is largely to establish “sustainable products as the new norm” in Europe.

In particular, the regulation focuses on industries with substantial environmental footprints, such as the textiles and ICT industries, and applies to all businesses within these industries placing products in the EU market, regardless of their base.

Digital Product Passports - a tool created to track a product’s lifecycle - will play a key part in this legislation. In particular, the passport will hold critical information on event history, transactions, and sustainability metrics, such as water usage and carbon emissions. DPPs - and the information they hold - will be made accessible via a data carrier (such as a QR code or barcode) which is affixed somewhere on the physical product and can then be scanned with a device such as a smartphone.

It is worth noting that although detailed requirements for the DPPs are still yet to be announced, businesses should consider their actions now to begin gathering and verifying data on their product’s environmental performance.

This preparation stage can be intricate due to the fragmented nature of the data across various systems within a company’s value chain. To overcome this, companies should map and organise their data to lay a strong foundation for compliance when the DPP mandate comes into force. By taking such proactive steps today, companies can ease their transition into ESPR compliance ahead of time.

The following steps outline a systematic and concise approach to assessing, cultivating, and incorporating critical product data throughout the supply chain:

Step one: Engage with stakeholders to evaluate your current position and readiness ahead of compliance

To enact stage one, businesses should actively collaborate with stakeholders throughout the supply chain, including suppliers, manufacturers, and logistics partners. This approach helps build a comprehensive view of available product data. Additionally, engaging in these discussions can reveal previously unknown information and open conversations about improving data transparency and access across the chain.

Step two: Undergo a data gap analysis to seek out missing information 

Having now identified existing data, it is key to conduct a data gap analysis that focuses on the elements likely to be required in a DPP - even before specific guidelines are released.

This could include metrics on production waste or the carbon emissions associated with manufacturing. Analysing this data can highlight gaps in your specific product reporting, enabling you to identify effective strategies to bridge them. Potential solutions might involve deploying monitoring systems or collaborating with new partners to enhance data collection and ensure accuracy.

Step three: Bridge data gaps with a Life Cycle Assessment (LCA) audit

Only after data gaps have been identified should businesses prioritise a life cycle assessment (LCA) to address these gaps most comprehensively. In simple terms, an LCA evaluates the environmental impact of a product throughout its lifecycle, starting from raw material extraction, offering a complete and detailed view.

Step four: Validate data sources to ensure efficiency and ease the mind

During the steps above, it is important to ensure you validate data sources to build an accurate, verifiable picture of each product. This means assessing the credibility of third-party data suppliers, and ensuring processes are underpinned by the relevant standards.

Step five: Consider DPP integration solutions for a seamless transition

Once the data that needs to be gathered is collected and understood, a technical DPP solution can be considered. Developing an in-house DPP system may not be practical for all businesses due to the complexities involved, so they will need to seek out partners who specialise in creating and implementing DPPs with their specific challenges in mind.

To maintain compliance, it’s essential to assess how data is formatted, entered, and managed within the system. This involves verifying that the DPP solution integrates seamlessly with current business infrastructure and offers real-time updates throughout a product’s life cycle. Selecting a customised DPP solution enables businesses to streamline data management, ensuring efficient capture, storage, and accessibility at every stage of the product life cycle.

Step six: The power of piloting to test, evaluate, and respond

After the above steps are enacted, a critical phase will be piloting a DPP solution. This will enable businesses to stress test processes and their selected solution while understanding the ‘bigger picture’ of the milestones required for full-scale deployment. Through piloting, companies will be able to reassess their approach and fine-tune any elements that need further attention. Moreover, this will help ensure companies are fully prepared to meet the final requirements when delegated acts are published.

In particular, the pilot step will enable businesses to evaluate the interoperability of the DPP solution implemented, enabling them to assess whether the new system integrates seamlessly with existing IT systems and supply chain management platforms. Moreover, alongside other benefits, a pilot will also enable businesses to assess the ‘user experience’ of the processes they have employed and the ease of access to pivotal information.

Conclusion: The path to success starts today

Although uncertainties persist while awaiting the release of the delegated acts, companies can proactively streamline their path to DPP compliance by prioritising actionable and gradual measures now. Developing a strong compliance strategy based on reliable data and robust validation processes will not only ensure readiness for ESPR requirements but also promote sustainability and strengthen operational resilience.

Lars Rensing is CEO of Protokol.

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