How can digital product passports create more transparency in supply chains?

Jan 308 min read

An introduction to the significance of creating transparency around environmental and social issues in supply chains for both consumers and businesses.

This newsletter was written by Saskia Tykkyläinen and Christine Nikander for a collaboration between Palsa & Pulk and The E-Waste Column. It has been published in both “The Just Transition Newsletter” and “The E-Waste Newsletter”.

How can supply chains be made more transparent?

The mass consumption of products is considered “a major cause of climate change and pollution”. This means that by producing less or producing products in more sustainable ways, it is possible to reduce pollution and protect the climate.[i] One way of bringing transparency and some accountability into how sustainable products are, or are not, is by using supply chain tools, such as digital product passports (DPPs).

To be meaningful, the use of DPPs requires criteria — or some type of indicators or benchmarks — to be set for the sustainability of products. While there are countless ways to approach this, the European Commission holds that a product could be considered more sustainable if it, for example, “[u]ses less energy, [l]asts longer, [c]an be easily repaired, [p]arts can be easily disassembled and put to further use, [c]ontains fewer substances of concern, [c]an be easily recycled, [c]ontains more recycled content, [or] [h]as a lower carbon and environmental footprint over its lifecycle”.[ii]

What are digital product passports?

DPPs are in essence a type of “supply-chain tracker”. They make the outcomes of a life cycle analysis more accessible for both corporate buyers and end consumers.

Past examples of tools used to track supply chains in the EU include the plant passports found on potted plants and the pink codes printed on eggs. Plant passports have been used in the EU to “identify the origins of plants and plant products, ensuring traceability and compliance with plant health regulations” since 1993.[iii] Egg markings in the EU have been used since 2004. They consist of a code that tells you the farming method, the country of origin, and the exact premises where the egg was produced.[iv]

Currently, the EU is working on developing mandatory battery passports, which are a type of DPP. A battery passport is in essence “a digital record that documents where each part of a battery came from and evaluates its environmental and social impact”.[v] Battery passports provide an insight into the raw materials and components used to produce a battery. Typically, the battery composition, the origin of the materials and components, the proportion of recycled content used, and the carbon footprint of the production are covered. Optimally, the processing locations for critical raw materials, as well as any labour and human rights issues that may arise within the supply chain, are also included. The overall aim of battery passports is to improve sustainable and responsible procurement practices and to create more transparency in complex supply chains.[vi]

Regulatory requirements on environmental sustainability

There are several international efforts around battery passports currently underway, meaning that the passports may well become an international standard over time. While the U.S. currently has no specific regulation that requires battery passports, the passports could provide more “traceability to prove [batteries] qualify for EV subsidies under the Inflation Reduction Act”. The EU has set out specific requirements for the sustainability and supply chain traceability of batteries under the Batteries Regulation.[vii] By February 2027, battery passports will be mandatory for all EVs sold in the EU. The batteries for electric vehicles and many other industrial uses that are sold in the EU must then have “a QR code linking to details on its makeup, origin, and carbon footprint”.[viii]

Looking at products more broadly, the Ecodesign for Sustainable Products Regulation (ESPR) has been in force in the EU since 18 July 2024. The regulation aims to make products on the EU market “more environmentally sustainable and circular”. The ESPR is a so-called “framework legislation”. This means that “concrete product rules will be decided progressively over time, on a product-by-product basis, or horizontally, on the basis of groups of products with similar characteristics”.[ix] On a high-level, the ESPR currently contains measures around digital product passports and green public procurement. It also includes rules “to address destruction of unsold consumer products”. The goal is to “improve the circularity, energy performance and other environmental sustainability aspects of products placed on the EU market”. The EU hopes the regulation will create incentives for “protecting our planet, fostering more sustainable business models and strengthening the overall competitiveness and resilience of the EU economy”.[x]

The ESPR applies to almost all categories of physical goods – with several exceptions, like food and feed. It will establish performance and information conditions or so-called “ecodesign requirements” for different product groups. Concretely, the ESPR will set out requirements to: “[i]mprove product durability, reusability, upgradability and reparability, [m]ake products more energy and resource-efficient, [a]ddress the presence of substances that inhibit circularity, [i]ncrease recycled content, [m]ake products easier to remanufacture and recycle, [s]et rules on carbon and environmental footprints, [and] [i]mprove the availability of information on product sustainability”. Under the regulation, similar requirements will be set on product groups that have similar characteristics.[xi]

The role of social impact under product passports

Under the EU Batteries Regulation, the mines involved in a battery’s supply chain, and the adverse impacts they have, must be identified. In line with this, well-designed DPPs should include information on Indigenous Peoples’ rights and adverse biodiversity impacts.

In this context, auditing becomes an important question. Over the past two decades, audits have been used by companies as evidence “that they have eliminated abuses in their supply chains”. Yet, there are currently still a lot of shortcomings in the quality of the work being done. An analysis of 40 000 audits by the Cornell professor, Sarosh Kuruvilla, in 2021 “found that nearly half had relied on forged or dubious documents”. Moreover, a New York Times “review of confidential audits conducted by several large firms shows that they have consistently missed child labor”.[xii]

The voluntary use of product passports

Some companies have already voluntarily taken considerable steps to improve their supply chain transparency and have also factored this into their design process. A few well-known examples include Fairphone, Patagonia, and Tony Chocoloney.[xiii]

There are, however, also numerous smaller startups that help trace and help manage supply chains. This even holds true for the food sector, which is exempt from the ESPR. A few examples include Palau, Reath, Freshflow, and GreenBytes.[xiv] Palau is an app that helps consumers understand the supply chains of food products and their impacts.[xv] Reath has set up a platform that creates “digital passports” for packaging items and tracks these throughout their lifecycle.[xvi] Freshflow uses artificial intelligence to trace food supply chains and to reduce food waste through “advanced order forecasting, replenishment, and inventory control”.[xvii] GreenBytes has created a restaurant management tool to reduce food waste, which uses “artificial intelligence to help restaurants optimize ordering, manage inventory, and break down menus”.[xviii]

Are digital product passports helpful and effective?

Overall, “evaluating the environmental and social costs of th[e] supply chain requires extensive information about every step in its production [such as if] mines exploited child labor, or how much fossil fuel was used to ship each part around the world”.[xix] The collection and verification of this information is not an easy task to do in practice.

That said, DPPs can provide consumers with valuable information. If executed well, DPPs can better inform end users on the materials of a product, and thereby help end users to — for example — make better purchasing decisions or recycle their products properly at the end of their lifecycle.[xx] Battery passports can, for example, be used to track “battery health over time” and are therefore particularly relevant for the used car market. Rather than merely having to base their decisions on milage, consumers buying used EVs can use battery passports to see “how the battery was cycled over its life”. The life cycle data and battery health included in battery passports can also improve battery recyclability.[xxi] If the battery passports are successful in the EU, similar requirements on “supply chain transparency and accountability could catch on elsewhere”.[xxii]

By shedding light into production chains, DPPs can hopefully move businesses and their design departments to truly make more sustainable choices. In line with this, more businesses and designers will hopefully take responsibility for the negative impacts brought about through their creations — instead of shifting the responsibility on consumers that lack the relevant data to inform their decision making.

Would you like to explore the life cycle of an electric vehicle battery further? Then have a look at Palsa & Pulk’s interactive visual.

The next newsletter will explore the importance of protecting biodiversity. If you want to be notified when it comes out, please subscribe to our mailing list.

About the authors

Saskia Tykkyläinen is a freelance sustainability and strategy consultant at Palsa & Pulk. She studied industrial product design and business management. Saskia has extensive experience working with young growth firms and entrepreneurs in accelerator and education programs. In her consultancy work, Saskia takes on projects that design and build sustainable business practices.

Christine Nikander is the founder of the environmental and social sustainability consultancy, Palsa & Pulk. She studied law at the universities of Columbia (New York), Edinburgh (Scotland), and Leiden (the Netherlands). Christine was a member of the Fall 2021 “Design For Social Innovation” cohort at the Columbia Entrepreneurship Design Studio. She has been writing The E-Waste Column weekly since 2022 and focuses on supply chain governance in her work.

About Palsa & Pulk

Palsa & Pulk is an environmental and social sustainability consultancy. It provides compliance, governance, policy, and strategic advice to its clients. Its work is mostly focused on supply chain governance, the just transition, circular economy, and human rights.

About The E-Waste Column

The E-Waste Column is a weekly column about e-waste, transition minerals, and critical raw materials. It touches on a range of topics including ESG, sustainable development, circular economy, EU law and policymaking, corporate social responsibility, the transition to renewable energy, the EU Green Deal, supply chain due diligence and auditing, human environmental rights, business and human rights, climate law, and corporate sustainability.

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