Latest / Activating Sustainability / Activating Sustainability | Ep 70: DPP

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Activating Sustainability | Ep 70: DPP · Activating Sustainability

• 0:00
  Speaker A: Foreign. Hello and welcome to Activating Sustainability, the Anthesis podcast, where we take deep dives into the sustainability issues that matter to help businesses turn ambition into action. I'm your host Chris Peterson. What comes to mind when you hear the term digital product passport? For many businesses, it's another compliance requirement, another regulation to prepare for another deadline and an already crowded sustainability agenda. But what if we're looking at it the wrong way? A passport isn't just a document you show at a border. It's something that travels with you. It holds valuable information, opens doors, and enables journeys that wouldn't otherwise be possible. In much the same way, a digital product passport has the potential to be far more than a compliance exercise. While it will become a requirement for many products sold into the European market, the data behind it can unlock opportunities that reach well beyond market access alone. In this episode of Activating Sustainability, we're joined by Anthesis experts Ana Carneiro and Fabrizio Saladini to explore what digital product passports really mean for businesses and why. Now is the time to start paying attention. Together we discuss the regulatory landscape and growing momentum behind digital product passports before exploring how the same data needed for compliance can drive smarter product design, strengthen supply chain visibility, support circular business models, build customer trust and transparency, and create competitive advantage in an increasingly data driven market. We'll also look at the practical challenges organizations face, from fragmented data and supplier engagement to governance and technology, and share advice on how businesses can start preparing today. If you've heard about digital product passports but are still asking yourself what they mean for your business, this conversation will help you move beyond compliance and start thinking about the strategic value they can create. Ane Fabrizio, welcome to the podcast.
• 1:59
  Speaker B: Great to be here.
• 2:00
  Speaker C: Thank you for having us. Chris.
• 2:02
  Speaker A: Absolutely. Well, maybe a good place to start is what is DPP for those of us that don't live in this world all the time?
• 2:12
  Speaker B: Yes. So a digital product passport is a digital mechanism to collect, structure and share information about a product. It's essentially going to bring together various different data points about a product and make those relevant data points accessible to stakeholders that come into contact with those products and also to the authorities in the jurisdictions where those products are going to be
• 2:39
  Speaker A: fantastic. And this feels, for those of us who have been in the sustainability space for a while, the panacea, the thing we've always hoped for. Curious. Why are we talking about this today?
• 2:50
  Speaker C: I would say there is definitely like a regulatory momentum right now and especially for dpp, just to provide some context, regulation that comes with which Is the Eco Design for Sustainable Regulation enter into force already in 2024. But then given that DPP is going to affect several product categories, that will happen over times in the next, at least for the first group of products in the next four or five years. And so in different ways we will have what they call delegated acts which are basically going to provide some more context on the product specific requirements. And this is about to happen right now. So by the end of the year, we will expect already some more clarity on intermediate materials like steel and iron. And then in February 2027, the first digital product passport is going to be into force for battery, which is concerning another type of regulation, because DPP is one of the key pillar of the Eco Design for Sustainable Power regulation, espr, but it also is going to affect other regulation, again, namely the battery one, which is the first one which will be requiring a digital passport for batteries. So it's something that is coming is right here and this is why there is a urgency to talk about that right now.
• 4:06
  Speaker B: I think it's also something that companies are talking about and definitely regulators and other agencies are talking about because the whole idea for digital product passports is that information that has usually been difficult to access will become much more accessible. So information that companies often struggle to consolidate about their products is going to be consolidated as a compliance exercise for these digital passports. And the idea is that information such as the origin of products, insight into the supply chains and where things are coming from, the actual various materials in a more detailed manner than what we're probably used to seeing, going down to the detail of any chemicals or substances of concern that are in those products. And there are some also interesting data points that I think link to where companies might previously have been making claims and so on about the carbon footprint of products and also technical compliance information that might be less exciting to some.
• 5:16
  Speaker A: Yeah. Just out of curiosity, is there also a technology element to this? I know something that we struggled with in the past has been one like how do we attach this data to a product? And also just given that volume of information, how do we get something that is actually valuable as opposed to just an industry average, for instance?
• 5:37
  Speaker B: So, yes, there's definitely a big component of technology that's needed to enable all of this. Obviously there's the fact that we are talking about very diverse data points that even within companies are not usually held within a single system or handled by a single team that need to come together. But then what we are expecting to see as more details get confirmed as well Is that the infrastructure for this is actually quite advanced in some ways. So not necessarily just making information available, but having some aspect of information exchange where additional information might be getting captured during the product lifecycle. So to bring this into a more tangible example, hopefully in 10 years time, if you have this laptop and you're taking the laptop in for a repair, even would be possible to capture the information of what that repaired entailed. So if there were any components that got replaced, what were those components, what was the model of the new components, et cetera, and being able to understand how that then extends the life cycle of that product. So when we think about being able to capture this information for the repair of one specific product, that means that we're tracking the information for that product at that event, individual units, which is exciting, but it's also a gargantuan amount of data that we're looking at for maintaining this. Almost like a living product record of everything that happens and where everything comes from and where everything is going.
• 7:15
  Speaker A: It feels very exciting to get to the end point of that. As a consumer, I know there's some concern within organizations about like, how much are they disclosing, what does that look like? And some of those obstacles. But before we get there, as people look at the scale of data and information that needs to be collected and given some of the challenges that you outlined in terms of the scale, what is the value of taking action now?
• 7:40
  Speaker C: Yeah, first of all, the DPP per se shouldn't be seen as a compliance exercise only, but really the recommendation that we give to our clients to look at the business value that can be created thanks to this large amount of data that they have available once they have collect all of that to meet the compliance to start with, there is an aspect related to the market access. So it's really about surviving in the market and making sure that the products that are currently in the European market can still be there thanks to the digital passport. So really the metaphor with the travel passport here works very well. So without a passport you can't get to places. And this is exactly the same without a passport that will be stopped at the border. And so they couldn't survive in the European market. So that's definitely the key requirements there. And also by starting now to be compliant. Although for some products category, again the deadlines might be a bit ahead of time. But by starting now, there is definitely the advantage of positioning the business in a competitive position compared to the rest of the market. Because as we were saying, there is a lot of Work to be done for sure. And that means that there are a lot of processes to go through, a lot of data to collect, governance as well that need to be refined. So by starting sooner than later, they will have the time to test things and to make sure that can get it right by the end of it.
• 9:04
  Speaker A: Well, and interesting too I imagine, to think about that window of opportunity to be an early mover within this as opposed to just becoming a compliance exercise. And maybe Anna, I'd be interested to hear, are you seeing potential customers or procurement teams starting to look for this in addition to the market access? As Fabrizio, you were saying?
• 9:26
  Speaker B: Yeah, I think that as we look at where the market is at, there are a number of industries for which there are no defined requirements just yet, but where companies are actively tracking and already looking to align to the expectations of espr. So one of the aspects that really brings this home for me is the needs of R and D teams. So where the regulation lays out not only information requirements but also requirements for the performance of products and how these products are going to be made moving forward. And in making it a compliance exercise that companies do need to disclose that information, there is an opportunity for companies to stand out by making sure that the information they are going to be disclosing is going to look good, so to speak. So when you have to disclose, for example amount of recycled content in your product, you just know that you're going to create a lot more trust if your products stand out for the right reasons. So we're really moving towards two things here. We're moving towards better trust from consumers and a better standing in the market where some of this information will also potentially act as the evidence for any claims that companies want to make which in the European market are also going to link to Empowering Consumers directive and towards smarter product design. Right, Product design that is data driven product design where the teams have access to a much clearer and detailed view of the performance of all of the different products across the portfolio. They are able to identify the hotspots, they are able to see in the future where these products perform well or not versus competitors. And setting these goals early on to make sure that by the time that you need to disclose that information they are going to perform well is something that companies have in mind and definitely something that we're advising our clients to look into.
• 11:42
  Speaker A: And then Anna, earlier you had mentioned the circularity benefits of having that data and information. How is that manifesting in practice for end of life of these products or what's the vision for that as it goes forward.
• 11:57
  Speaker B: So, as you already mentioned, a lot of companies that operate towards the end of life activities, processing companies and so on, they are actively already looking at what is this going to look like. And we're seeing that the companies that are putting the products out in the market are now looking at the opportunities associated with this as well. So having more data on products and having this way of tracking products means that the digital product passports can actually enable things like resale, because you actually have visibility of what is the product made out of, what is the journey of that product, that information not getting lost, and then also making sure that those additional activities can also be traced. And that in order to, for example, protect the product that you own, protect its value, that there are incentives for you to repair using components from the brand. That creates a direct sales incentive for the brand to be price competitive in that regard as well, for the brand to ensure that they have the partnerships in place that will enable refurbishment, that will enable capturing the product back at the end of the life of even the first or the second user, whatever it might be. That means that you get much better control of the value chain and you also have opportunities to capture value back at the end of life. For example, when we think about things like, again, electronics, we foresee a future in which companies have that better ability to go in. They know that the product's not performing anymore, pose a good incentive for the owner of that product to send it back. And within that then being able to potentially reuse components, if that's no longer an option, then at least capturing the value of all of those materials and reintegrate them into their value chain so that they can go and be made into new products. And these are really exciting opportunities for circularity, but also really exciting opportunities for the brands that get ahead on this.
• 14:15
  Speaker A: Yeah, fascinating. It always feels like data has been such a big obstacle to accelerating that. So it's really exciting. And maybe, Fabrizio, looking at the other end of the stream, if we go upstream, what are some of the benefits of this data from a supply chain perspective?
• 14:32
  Speaker C: Yeah, absolutely. I would say that first of all, strengthening the resilience across the supply chain is one of the key benefit of this type of initiative. And that is gonna provide more clarity to businesses on what their supply chains look like. Because let's face it, sometimes, and most of the times, businesses don't necessarily have full visibility across the supply chain, or at least sometimes they have visibility with the media supplier with the tier one or two, but Then as you start to go a bit deeper, unlike tier three, et cetera, you realize that there is not necessarily that level of visibility that we usually hope for. So. So first of all, again, by complying with the DPP requirements, this large amount of data that comes from the supplier would provide full visibility of what's going on in supply chain for businesses. And that put them in a really strong position to make informed decision to start with, because they could easily spot what are the gaps that they're dealing with, if there are gaps within suppliers that need to be closed, or if there are dependencies, for example, that can be critical for the business itself. So these start to generating all this kind of thinking that already move away from the compliance aspect, as you were saying before, but actually goes more to what is the business value that we can get here, how we can make this decision, who are the suppliers that we really want to engage with because we know that we can trust them and we know that can meet the sustainability requirements that we are also required to meet. And that again trigger a whole different conversation which is going to make a huge difference for the businesses. And just to give you an example of something that we have dealt with recently with a Fortune 10 technology client, we worked with them on a full material disclosure and we helped them with their supply chain and they were able to actually have full visibility on those materials that were more exposed to potential tariff. So with that type of visibility and with that type of awareness, they were able to make decision that helped them to save around 1 billion of dollars.
• 16:34
  Speaker A: Amazing. And as we think about maybe now we've covered both ends of the stream and the value chain. How does that show up for customers both in terms of B2B customers and then also B2C customers?
• 16:49
  Speaker C: Yeah, with the customers, this is going to provide also the level of trust that we all look for. So people are definitely more eager to have a clear understanding of what are the sustainability requirements of the product. That is going to provide the level of transparency that both businesses for B2B but also consumers need for the B2C. And this is something that people have been asking for a very long time. And so hopefully this kind of schemes and this kind of framework would provide a level of transparency and that amount of information that allowed them to make informed decision as well as businesses to select materials from a procurement point of view, but also has consumer to make the most sustainable choice when it comes to buying the products that we need in our daily life, because we are all consumers at the end of the day. And we all experience in our daily life the choice that we need to make sure that we also act in the most sustainable way. And basically this kind of information that can be made available with a digital product passport would allow to move the conversation from trust us to here are the evidences. So this is exactly the purpose of a tool like the digital product passport.
• 18:00
  Speaker A: Yeah. And that feels like such a game changer. And I love the way you put that of like the trust us framework versus here's the evidence framework. Yeah. And it's fascinating hearing the conversation, what strikes me as both kind of the advantage and traits, and then the disadvantage if your competitors are getting there first. Right. Just coming back to your comment about trust is it's really hard if your competitor is like, here's the evidence, and you're going in saying, we think it's good. Right. I think you guys have done a great job outlining what the value is, but what are some of the hurdles to being able to get there so that people can be going in, eyes open around that?
• 18:36
  Speaker C: Yeah, that's a really good point. And this is also the way that we usually recommend our clients to get started with, because we appreciate that it's a lot of work and it's not something that happened overnight. I mean, this is not a single exercise of compliance and ticking off a box. And that's pretty much it. Again, it's a substantial change that bring business to think how they operate to some extent, depending on the level of readiness as well that they have. And this is actually one of the key points that we recommend businesses to start with, understanding what is the relevance for them. So understanding what are the products in scope, understanding which regulation they need to operate, and having a clear understanding on the timeline as well. So starting really with a clear snapshot of what it looks like for them to get into this journey. And as I was saying initially, keeping in mind again, that of course compliance is the key driver, but looking at that as a business opportunity, because that is really what is going to make a difference and how they can make the best out of it. We have been talking a lot about data. Of course, it's really all about data here. And so mapping what is the current status of their data is fundamental monitoring of what they currently have, what are the data gaps that they have, how to close those gaps, starting to engage with the suppliers, because again, that's also a lot of work. So making sure that there is clarity on what's the current level of readiness for a data point of view and making sure that everywhere there's a gap, they're able to close that. And after that, I would say that ownership, it's really important. So making sure, as we were saying before, this is not only up to a sustainability team to deal with, this is something that's going to involve the different functions of a business. So making sure that there is clear ownership across the board on what everyone is supposed to do and to make sure that all these come together. And eventually to be practical, given the large amount of work that is needed, starting with a pilot, I would say is one of the wisest thing to do because it would allow first of all to address all of what I've just said in terms of data mapping, because by doing that with an individual product can allow you to have a better understanding of what are the practical aspects that you need to deal with. And it will give also the opportunity to learn from the process. And once that is established, then at that point, point would be mainly about scaling that up at a product portfolio level.
• 21:00
  Speaker A: And when you mentioned timeline, what is a reasonable timeline to think about coming into this process, going through a pilot and actually standing up a program that would meet both regulatory requirements and create this competitive advantage?
• 21:14
  Speaker C: Yeah. So just to give you an example on what the regulation says, again, I was mentioning initially the delegated act. So basically once the delegated acts are published for a specific product categories, there is a time of 18 months for businesses to be compliant. So they have the window to make sure that they can get even everything in the right place to be compliant. So we are talking in the orders of months. What we recommend is not to wait for the delegated acts to be out, but actually to act early for everything that we just said, also from a market point of view and taking most of the advantage of being ahead compared to the competitors. But all that to say that we are talking about months, sometimes potentially years as well. So the sooner the better. And also in the first round, over the next four or five years, we are talking about a group of products that for sure is going to be extended to other products in the future. So the whole scheme is something that in the next decades is going to be in place for almost every physical product in the European market.
• 22:19
  Speaker A: Great. And, and I know Fabrizio mentioned pilots being a great way to start. How would you recommend people get started?
• 22:25
  Speaker B: I think the main thing is start with bringing everything together from the internal perspective and seek help where you need to, but don't necessarily marry too early into a provider of a system. So that is One of the aspects that has been very much discussed within industry, that there are a number of different providers, some which are closer to the European Commission than others and actually taking part in the pilots with the European Commission. But there's a lot of different providers in the market that have a system, but they don't necessarily understand the data and they don't necessarily understand the businesses that they are working with. And we've seen frustration and rightly from the market we've seen companies being very much like, oh, you know, our compliance teams don't think that this is the right data to be putting forward, but this is what we're being asked for. I would say look at what are the things that you're going to benefit from and kind of no regret actions. What are the directional actions that you can take even where the detail might not be defined yet? What are those actions that your company can be taking today that are going to align to the priorities of the regulation that are going to align to the priorities of the delegated act? If those are already defined, find that you can take that are going to benefit the business without necessarily committing additional budget into something that might not work out in the end. So I think that would be my number one tip for anyone who's out there and considering what to be doing now is do that planning, start that work, but don't try to rush to the finish line. This is going to be a bit of a marathon, not a sprint.
• 24:24
  Speaker C: Yeah, I totally agree with that. The other tip that I will have to close is to really to look at DPP as a data strategy catalyst because we have been talking of course about all the requirements at a product level, but you might have understood by now that given the amount of information that needs to be collected on the product, but also across the supply chain, all this information are going to unlock opportunities across different things and most of anything can fulfill different purposes. So from sustainability reporting to supply chain due diligence to circular economy initiatives like all of that could be supported by all these amount of data. So this is really an opportunity that goes beyond compliance for sure, but goes beyond also the scope of DPP versa.
• 25:10
  Speaker A: Wonderful. Thank you both so much for all the insights and perspectives. We really appreciate it.
• 25:16
  Speaker B: Thank you Chris.
• 25:16
  Speaker C: Thank you Chris.
• 25:18
  Speaker A: And thank you for listening. Please visit the Show Notes and the anthesisgroup.com website for additional resources, including a new guide to support you on making the most of your digital product passport efforts. Thanks again and take care. Of.