Tech entrepreneurs, SMEs, and businesses across Europe may already be aware of the Ecodesign for Sustainability Products Regulation (ESPR), a legislation focused on creating sustainable products that came into force during the summer of 2024. However, due to the complexities of the legislation’s requirements, many haven’t begun their preparation because they simply don’t know where to start.
As part of the ESPR’s Digital Product Passport (DPP) mandate, businesses will need to begin their compliance journeys by identifying and validating data now. This step is likely to be more challenging for SMEs, who are unlikely to have the scale of resources available like larger firms to dedicate to compliance efforts.
A recap of the ESPR, DPPs, and their role in advancing economic circularity
As I discussed previously in Silicon Canals, shortly before the regulation came into force, the ESPR seeks to boost circularity and the practices that contribute to sustainability by creating a framework that helps make “sustainable products the new norm in the EU, by making them last longer, use energy and resources more efficiently, easier to repair and recycle, contain fewer substances of concern and include more recycled content.”
The regulation – part of the EU’s broader Circular Economy Action Plan – is set to impact select industries and products that are currently deemed to have the biggest impact on the environment (including -but not limited to – the ICT and textile industries) and will apply to any businesses, within these sectors, that place products in the EU market.
As part of this, the implementation of DPPs – digital records that contain information about a product’s lifecycle, materials, and environmental impact – will be mandated. The EU is hopeful that the role of DPPs will prove invaluable in enhancing transparency, sustainability, and circularity across EU supply chains.
Moreover, although the delegated acts—guidelines outlining the specific information required in DPPs for various industries and product groups (e.g.water usage, carbon emissions during manufacturing)—have yet to be announced, the first crucial step toward compliance will be collecting and validating data on a product’s environmental impact, which will eventually be used to populate the DPPs with the relevant information.
This step is likely to pose significant challenges. Data within an economic operator’s value chain is often dispersed across various fragmented systems, both internally and externally. Even when relevant data is collected, validating it against other sources and determining a single source of truth can be a complex task.
This is why all tech leaders, and businesses, regardless of their size, should begin preparation for the DPP mandate by identifying and mapping their data ahead of time to ensure they’re in the best shape to support a smooth compliance journey.
Here are some fundamental steps that can guide businesses in launching their data preparation journey:
Prioritising conversations with stakeholders to assess your current position
As an initial action point, businesses should engage with stakeholders across the supply chain such as suppliers, manufacturers, and logistics partners to build a picture of the environmental data currently available. Such transparent conversations have the potential to uncover the information you didn’t know already existed and provide a more structured route to begin discussing how data transparency and access can be improved.
Conduct a data gap analysis to pinpoint missing information
Technology leaders should consult their teams to conduct a data gap analysis on existing data they have access to, focusing closely on the elements likely to be required in a DPP (ahead of the specific requirements being announced via the delegated acts). This could include information on the waste generated during the production of an item or information concerning the carbon footprint of the production process.
Through this exercise, businesses will be able to pinpoint where the data gaps within the business currently are, so they can find ways to close them.
The importance of a LCA to navigate data gaps
After identifying data gaps, the next step is to perform a Life Cycle Assessment (LCA). This method examines the environmental impact of a product at every stage of its lifecycle, from raw material extraction onward, providing a holistic view of its sustainability profile.
Validating data sources to enhance precision and ease of mind
Amidst the above steps, is it vital that businesses validate data sources to help build an accurate and verifiable picture of each product. This means assessing the credibility of third-party data suppliers, and ensuring processes are underpinned by the relevant standards.
Considering DPP solutions to enhance a seamless integration
Due to the varied complexities of DPP implementation, building a DPP solution won’t be a viable option for most businesses – particularly SMEs. Due to this, they will likely need to seek out suitable partners who specialise in the creation and implementation of DPPs with their bespoke challenges in mind.
With the implementation of DPPs being central to compliance, assessing how data needs to be inputted, and the resources required to ingest data into the DPP system is critical to considering the capture and storage of data in the correct formats. Businesses should also consider whether the DPP solution can integrate with existing systems and how it creates an ongoing real-time picture of a product’s life cycle.
The power of piloting
Once all of the above steps are adhered to, a natural progression would be to pilot the implementation process – an activity that will enable businesses to stress-test processes while capturing data to have a more accurate picture of the scale and timeline for full deployment.
Through doing this, businesses are likely to be in a much better place to commence their compliance efforts once the delegated acts are announced.
The starting route to DPP compliance
While awaiting the release of the delegated acts brings some uncertainty, SMEs have the opportunity to prepare now on their terms.
By taking the time now to create a robust compliance strategy, one rooted in accurate data and validation, businesses can ensure they align with the ESPR’s DPP mandate and enhance sustainability with ease.
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