Should I care about Digital Product Passports?
There’s a lot of hype around DPP, we explore what it actually means for most brands.
Last week saw the ESPR enter into EU legislation, which mandates Digital Product Passports (DPP) for products sold in the Eurozone starting from 2026-27. The growing profile of DPP in fashion and new luxury circles is a positive thing as it increases attention to transparency, which in turn should increase sustainability efforts within the industry.
Commerce Thinking has carried out detailed research into the wider legislative agenda surrounding transparency, DPP and sustainability within fashion. As well as exploring the practical steps brands are taking to embed DPP and other transparency / sustainability measures into their operating models.
Based on our findings:
There are market leaders both in terms of DPP technology and brands leading the change. In both cases, they’re doing it because they care about the sustainability of the industry and want to drive positive change through action.
However, there’s a legitimate question that leaders of non-publicly traded brands should be asking… Do I really need to care about this yet?
Legislation remains in consultation, meaning no one actually knows what the final form will be. But it’s probable that the enforcement of legislation will be rolled out pragmatically with focus, initially, on larger, publicly traded organisations. It’s unlikely that enforcement will reach smaller, independent companies (especially those outside of EU importing into the region) in the short to medium term.
The majority of information on legislation changes and the implications of DPP are being published by organisations with a vested interest in DPP (e.g. service, software, consulting). So there’s a level to which warnings are being over-stated or, at best, shared with a false certainty.
DPP is an acronym that has taken hold. It’s often used as short-hand for a much broader set of challenges, which is leading to confusion and bad strategy inside of brands.
In this post we aim to answer the simple question that leaders of small and medium size brands should be asking themselves - do I need to care about Digital Product Passports?
We’re sharing objective insights on the legislation, beginning a series focused on how brands plan and execute a DPP and transparency strategy. In this post we’ll cover:
Recap on DPP
Explore what the legislation means for non-EU based brands
What’s the risk of doing nothing
What’s the minimum amount of work required
Predictions on what’s going to happen
Recommendations on what brand leaders should do next
ICYMI
Remind yourself of the DPP agenda here. The key points to be aware of:
DPP is part of a wider legislative framework from the EU commission - Ecodesign for Sustainable Products Regulation (ESPR). It aims to improve circularity, energy performance and other sustainability aspects of products being sold in the Eurozone.
Product specific regulations are yet to be published, but textiles have been identified as a priority product group.
The Digital Product Passport (DPP) will hold data from throughout the value chain of a product, including Product, Material, Asset and Event data.
A digital record (or digital twin) is connected to the physical product via unique identifier - QR code, NFC, RFID or other data carrier - allowing consumers, authorities and other stakeholders to access detailed information on the product.
I'm not based in the EU, should I care about DPPs?
Given that DPP legislation is being introduced by the European Union, it begs the question - do brands based outside the region need to care?
The (overly-) simplistic answer is; yes.
Any brand selling into the EU should be on top of the key details and aware that it’s a dynamic situation with legislation still under consultation. Similarly, the EU has a track record of introducing initiatives that are then replicated in other regions - e.g. GDPR - so it’s wise that brands, at least, keep a close eye on the situation.
It’s also implied that the legislation will apply to all products placed on the EU market, including those produced outside of the EU or by companies based elsewhere.
The more nuanced answer is; it depends.
If you’re publicly traded and selling into consumers within the EU, then it’s a definite yes. If you’re independently owned, doing small to moderate volumes of sales to consumers within the EU then (honestly) maybe not yet.
Much of the warnings being called out, are coming from people with a vested interest in DPP solutions. In our opinion, they’re guilty of over stating the risks and down-playing the fluid nature of things currently. Brand leaders need to be reticent on this.
It’s still unclear how severely the legislation and compliance will be enforced, and it seems improbable that legislators will be able to take a hard-line stance with everybody from day one. Worth stressing that we are NOT legislation and compliance experts, and we don’t have EU legislators to chat to. However, the notion that the EU will set up and enforce DPP policies with every small and medium sized brand around the world, shipping (relatively) minuscule volumes of product to the region, seems Orwellian and beyond the realms of plausibility.
What is the risk of doing nothing?
There is currently little information out there on the penalties of non-compliance. The indication is that there’s a real risk of products being removed from sale in the EU market if they don’t comply.
Which, if you’re doing proportionally large volumes into the EU then it’s a risk you’ll want to actively manage. Conversely, if like a lot UK and US brands, the EU is a (relatively) lower priority then the investment required in compliance may not be worth the reward. The judgment call will boil down to the relative risk of having goods taken off the EU market.
Also (and this is purely a prediction), it’s unlikely that penalties will be issued in the immediate aftermath of legislation to smaller, independent businesses. It’s probable that larger companies - particularly those that are publicly traded - will be the primary focus because they have higher volume of products being sold in the Eurozone and have disproportionate profile. It’s more likely that EU enforcement will go after whales and big fish before they start penalising (relative) minnows.
(Caveat, we’re tech experts not policy gurus).
What's the minimum viable amount of work I need to do?
Everything relating to DPP is in consultation phase, meaning few actually know what’s coming.
Furthermore, the directive is abstract and (we think, intentionally) brief. Everyone needs to keep in mind that there are lots of agendas at play in this whole initiative. And that we shouldn’t be entirely directed by the advice that is coming out from vendors and consultants operating in the space.
What is clear is that an enormous challenge will be set to the industry, but it’s inconceivable to me that the entire fashion industry will be able to provide a digital twin for every single unit manufactured and sold into the EU, with event level tracking of every single movement associated with that physical unit from day one.
Honestly, just think about what that means in the operation of each and every brand.
If you’re buying 1,000 units of a grey hoody in large, you will have a single sku code shared across them all but each individual unit will need its own unique identifier attached to the garment and recorded inside of the sales, purchasing, inbound and outbound logistics systems logging every single event against every single unit…
To expect every small to medium sized brand to comply to this level by 2026-27 isn’t realistic and I’m pretty sure the legislators know this. Currently the direction is so vague and so seemingly vast, it’s almost impossible to confidently say what minimum viable is.
But there are great examples out there of what good looks like.
Examples of what “good” currently looks like on DPP
Chinti & Parker / powered by Fabacus
A dedicated site powered by Fabacus - hosting information on product journey, environmental impact and more.
Example: https://chintiandparker.xela.co/dl/01/724022980804/
Artknit Studios / powered by Renoon
Transparency information rendered in Renoon’s signature style, embedded within the product landing page within Artknit’s Shopify store.
Example: https://artknit-studios.com/products/the-linen-cotton-ribbed-sweater-milk-white
Kappahl / powered by TrusTrace
More detailed product, material and asset information stored in a dedicated DPP site powered by TrusTrace for Kappahl.
Example: https://dpp.kappahl.com/01/07391998008875/21/9#tt-highlights
Predictions on what's going to happen?
As above, we predict legislators won’t aggressively pursue non-public brands in the first waves following DPP legislation coming into affect in 2026. There will be an acceptance that the demands are huge and that the vast of majority of fashion, apparel etc brands simply won’t have the capabilities in place.
We think there’s a real risk that this thing becomes regarded as EU bureaucratic red tape and it falls flat on its face despite the excitement around it, and this risk becomes greater the more aggressively penalties are rolled out. Enforcement is a delicate balance, how this lands globally and in what geo-political climate it enters is going to heavily influenced perception - which will determine whether it’s deemed successful and worth pursuing or not…
A more practical approach is an evolving set of compliance rules that are more tailored to the size, scale, resources of each brand. H&M Group, for example, are miles ahead of virtually everyone else (and that should be massively celebrated and emulated) but they have resources that dwarf the typical early and mid stage brand. The compliance policies and demands placed on brands will need to be nuanced for the legislation to have practical impact.
Following review of directives that came out earlier in 2024, the expectation is primarily on big companies to be the first to make the change, giving SMEs more time to learn and implement
What do we recommend brand leaders do about it?
If you’re an early to mid stage brand, what you do really depends on three things:
Sustainability ambitions: If you have no interest in being a sustainable brand (or being seen to be a sustainable brand), don’t spend money on this right now. If you do have sustainability ambitions, there’s never been a better time to commit seriously to much greater levels of transparency due to the level of innovation and investment taking place (especially in technology designed to simplify).
Budget: If you have no money at the moment, don’t spend what you’ve got on this right now. If you have budget to commit then DPP legislation is the catalyst to move seriously on a CSR/Sustainability agenda.
Risk appetite: If you’re comfortable biding your time and waiting to see what comes out from the EU and waiting for the legislation to come into force before having a plan in place, don’t spend money on this right now. If the threat of having product removed from EU market or the PR back-lash that could come from compliance failure is a big motivator then it’s time to act.
Our position on DPP is simple. The legislation is merely the stick, and nailing transparency is the carrot. Brands who commit to greater levels of transparency pre and post purchase will, in time, have competitive advantage and differentiation vs brands that don’t. And (we expect/hope) that brands who don’t commit to being transparent will be regarded as dinosaurs in an increasingly informed consumer market.
The net result of more brands committing to transparency, will be more conscious and ethical practices, which will lead to a more sustainable economy. The alternative almost doesn’t bare thinking about.
So what you do next boils down to how much you care about sustainability.
What’s coming up
This research series focuses on helping brand leaders plan a transparency strategy, sharing actionable advice and building a prototype data & technology model in public.
We’ll cover:
How we’re conceptualising DPP into two main stages, pre-purchase and post-purchase
Sharing a vision of what the onsite customer experience should look like pre-purchase (with help from friends)
Sharing a vision of what the onsite/offsite customer experience should look like post-purchase (with help from friends)
Establishing an MVP operator experience and a map for what needs to be factored into your plan
Summarising who brands should consider working with to build and execute a DPP plan
Want to talk?
Book a call with Luke at Commerce Thinking to learn more about how brands can prepare and execute a transparency strategy by clicking here.