The Digital Produkt Pass in Realization

POSITION | SUSTAINABILITY POLICY | TECHNOLOGY

The Digital Product Pass (DPP) in Realization Practical, standardized and SME-friendly

March 22, 2024 Introduction/Initial situation Digital Product Passports (DPPs) can make a key contribution to promote the green and digital transformation if they are designed accordingly - particularly through the necessary delegated acts under the new EU-Ecodesign Regulation (ESPR). They also offer companies the opportunity to develop new and sustainable business models. A DPP makes it possible to store product-related information in digital form and make it easily accessible to market players and consumers. DPPs are therefore also an instrument for the transition to a circular economy, which is being pushed politically at European and national level. In addition, DPPs can also make a significant contribution to digitalization and increasing competitiveness. However, this requires the needs of the economy to be taken into account and practical and company-compatible solutions to be developed, particularly with regard to small and medium-sized enterprises (SMEs).

This includes the following basic requirements for the design of DPPs: ▪ Technology-neutral approach - applying the principles of the New Legislative Framework (NLF) where appropriate ▪ International connectivity for suitability in global supply chains ▪ Simple and unbureaucratic enforceability of DPP requirements to facilitate market surveillance ▪ Compatibility with the needs of Industry 4.0 The first DPP to be implemented in the EU results from the Battery Regulation, which came into force on August 17, 2023. However, the actual basis for the DPP will be the new EU-Ecodesign-Regulation (ESPR), which is expected to come into force in summer 2024. It will make the introduction of DPP mandatory for numerous products. Further delegated acts under the ESPR will define the necessary product-specific requirements for certain product groups or categories. In addition, a mandatory DPP is included in the Commission's proposal for the new EU-Toys Safety Regulation (TSR).

Franz-Josef von Kempis | Environment, Technology and Sustainability | T: +49 30 2028-1509 | v.kempis@bdi.eu | www.bdi.eu

The Digital Product Pass (DPP) in Realization

The DPP is also increasingly being included outside the ESPR and TSR in proposals for European legislation, reports and dossiers in the context of the dual, i.e. green and digital, transformation, for example: ▪ the Critical Raw Materials Act of the EU, ▪ the evaluation report of the New Legislative Framework (NLF), ▪ the customs reform of the European Union, ▪ the EU regulations on batteries, ▪ the H2 Global & Hydrogen Europe Policy Brief, ▪ the reform of the EU Textile Labeling Regulation, ▪ the EU Detergents Regulation.

Many DPP activities are currently running in parallel and are not coordinated enough internationally.

This inefficient approach jeopardizes the actual goal of the DPP, which is to enable a circular economy, and threatens to cause a great deal of effort and high costs for companies during implementation, as well as consuming large amounts of resources for enforcement authorities and users. Furthermore, inconsistencies in legislation and regulatory overlaps are to be feared, which could lead to obstacles to the free movement of goods in the European Single Market and in international trade as well as to distortions of competition. Effective coordination of the various regulatory approaches is therefore urgently required in order to ensure effective and uniform implementation of the DPP and the IT infrastructure for exchanging the data contained in the DPP. It is therefore to be welcomed that a corresponding standardization of the DPP is taking place at European level. At the same time, care must be taken to ensure that the requirements arising from a wide range of regulations do not create disproportionate additional burdens for companies. Such one-sided complications would undermine the international competitiveness of European companies and call into question the objectives of the DPP. The economic players concerned should therefore be closely involved in the further regulatory processes for implementing the DPP. In addition, the amount and type of data to be disclosed in a product passport must be clearly and clearly defined. It is essential to ensure that company secrets are protected and that no company or product-relevant information can be leaked by a DPP to unauthorized third parties. Liability issues must also be clearly regulated. Economic players in the downstream value chain should not be held liable for missing, inadequate or incorrect mandatory information from the upstream production stages. Instead, the parties obliged to provide information must guarantee the accuracy of the data transmitted.

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The Digital Product Pass (DPP) in Realization

Essential requirements for the DPP By taking a leading role in shaping the EU DPP, German industry has the opportunity to strengthen its competitiveness in the medium and long term. It is therefore all the more important that manufacturers - as the most important source of information for the DPP - perceive it as an advantage and not a burden. The DPP should fulfill the following common horizontal requirements in all applications, which can be supplemented by sector-specific provisions.

▪ The DPP must be horizontally interoperable, adaptable to sectoral needs and technology-neutral.

The implementation of a DPP is an iterative process that should be continuously developed in order to take account of customer and user experience as well as technological developments and regulatory requirements.

▪ A technology-neutral approach is required, particularly in the area of the New Legislative Framework (NLF)1 . This ensures interoperability between the various regulatory areas and is therefore of the utmost importance for German and European industry operating in the global market.

▪ The technical framework for a DPP system is being developed as part of the standardization mandate of the Ecodesign Regulation (ESPR). All regulations that require a DPP should refer to the technical structure of the DPP system of the ESPR. In turn, regulated content may differ.

▪ Simple and unbureaucratic enforceability of the legal requirements for the DPP is essential to increase the effectiveness of market surveillance and to make clever use of market surveillance resources. Limiting the legal requirements to basic requirements in accordance with the principles of the NLF is a decisive step towards making them easier to understand.

▪ International acceptance must be ensured in order to avoid media disruptions and the associated inefficiencies in the global supply and value chains. For example, the design of a digital product passport must be interoperable, international or at least coordinated within the EU via standards in terms of form and content.

▪ Parallel to the introduction of the DPP, the existing regulation must be streamlined as far as possible from requirements for paper-based product documentation. Future regulations should also only require paperless product documentation as part of the DPP. ▪ The DPP must not be limited to the sole implementation of European legal requirements, but must also offer the possibility of including voluntary and additional information from the manufacturer from the outset.

▪ Even in the horizontal and even more so in the sectoral design, it is crucial that the amount of data remains economical and does not overburden the economic operators, as otherwise the costs of data procurement and maintenance will be unreasonably high. This is particularly important with regard to SMEs and small batches, which are now produced industrially down to batch size 1 (mass customization).

1 NLF: On the one hand, definition of essential requirements in the legal text in the form of "protection goals",

on the other hand, technical measures to fulfill these protection objectives by applying harmonized European standards (hENs).

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The Digital Product Pass (DPP) in Realization

▪ The information contained and communicated in a DPP must have a clear added value (e.g. for maximizing and optimizing the circular economy) and be collectable in the supply chain. This added value must be the subject of discussion between standard setters and the economic operators concerned, and its criteria should be adapted to new, for example technical, conditions. Standardized semantics are therefore recommended.

▪ Data security must be guaranteed and the content or attributes of digital product passports must be taken into account with regard to intellectual property rights (IPR) so as not to harm European competitiveness. The "need to know" principle should be defined in the value chain in order to place products on the market in a copy-proof, transparent and sustainable manner. At the same time, recycling companies need sufficient information on ingredients and composition in order to ensure efficiency and quality for the collection, separation and production of secondary raw materials in the circular economy. In order to meet all legitimate interests here, clear regulations are required as to who has which read authorizations for which data.

▪ Data must be better bundled to enable data integrity. Duplicate data storage with regard to existing databases such as SCIP and EPREL should be avoided. Interoperability of existing databases with the Digital Product Passport is much more important here.

▪ With "DPP 4.0 - the Digital Product Passport for Industry 4.0", industry associations and companies have presented an advanced implementation of the DPP concept. This concept is based on digital industry standards and can be a model or at least a permissible option for the implementation of the DPP in the corresponding legislation in the EU.

Imprint Federation of German Industries (BDI) Breite Straße 29, 10178 Berlin www.bdi.eu T: +49 30 2028-0 Lobby registration number: R000534

Editorial office Helena Weizel Environment, Technology and Sustainability Officer T: +49 30.2028-1589 H.Weizel@bdi.eu Franz-Josef von Kempis Environment, Technology and Sustainability Officer T: +49 30 2028-1509 v.kempis@bdi.eu BDI document number: D 1888

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