Harnessing the power of digital product identification

The European Union’s (EU) Digital Product Passport (DPP) presents one of the most significant transformations for businesses operating within the bloc. DPPs will be rolled out across various product groups, starting with textiles in 2028.

One of our goals is to help unlock the DPP’s power to build more responsible, circular business models that benefit companies and EU citizens alike.

Following the European Parliament elections in June, and with a new five-year mandate for the European Commission, it has become clearer than ever that enhancing European competitiveness is a necessity that must be pursued with sustainability at its core. And while some may see regulations like DPP as a hindrance to European competitiveness, we at Avery Dennison see DPP as a tremendous opportunity to unlock a triple-win scenario – for sustainability, the circular economy and profitable growth. One of our goals is to help unlock the DPP’s power to build more responsible, circular business models that benefit companies and EU citizens alike.

Digital solutions are enablers of the circular economy, allowing for regulatory compliance with the DPP while being key assets for brands to better communicate with consumers. They are an excellent example of how sustainability-driven policies can also be good for business.
The demand is clear: Europe needs policies that address the current challenges and foster the right environment for businesses to play their part in the green transition through innovation and circularity. For a huge number of European businesses, the DPP clock is now ticking and the race is on to ensure compliance.

The DPP mandates making a digital twin for each item within a product group, containing information about its composition, origin and end-of-life options. This fosters transparency throughout the supply chain, empowers consumers, extends the life of products and paves the way for a more circular economy. However, building and managing this data infrastructure is being positioned by some as a daunting task for businesses in the EU and globally. It does not need to be.

However, building and managing this data infrastructure is being positioned by some as a daunting task for businesses in the EU and globally. It does not need to be.

The essentials: what makes a digital label

Digital labels unlock supply chain transparency and circularity while simplifying DPP compliance for consumer brands across sectors such as textiles. Other product groups for which the DPP will apply in the coming years include iron and steel, aluminum, furniture, tires, detergents, paints, lubricants, chemicals, energy-related products and electronics.

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• Physical label: any digital label must have a physical component visible to its readers. Whether this is a label on a beverage bottle or a textile label attached to a garment, it all starts with a physical component.
• Unique digital identifier: each product is assigned a unique digital ID that links to its digital twins
• Data carrier: unique identifiers are embedded into data carriers such as QR codes, RFID tags and NFC tags, which enable the connection between the physical product and the digital twin. Data carriers offer a variety of readability options: from the one-to-one readability offered by QR codes to the one-to-many readability enabled by RFID, allowing up to 500 scans per second.
• Connected product cloud: information captured via data carriers is stored and visible within a cloud-based platform, such as Avery Dennison’s atma.io connected product cloud. Data stored on the cloud can be selectively shared and visualized by consumers, brands, and repairers and sorters, based on their access rights.

When companies look to implement DPP solutions, these elements are essential because they will ensure that digital labels effectively connect physical products to the digital world, creating a range of possibilities for businesses operating in Europe.

Digital product passports: ensuring more transparent and competitive supply chains in the EU

The DPP aligns perfectly with the EU’s renewed purpose to make policies that advance sustainability while preserving competitiveness. By enabling transparent product life cycles, digital identification solutions encourage:

• Informed consumer choices: consumers gain access to detailed information about the environmental impact of a product, empowering them to make responsible purchasing decisions. This also helps to better connect brands and consumers.
• Extended product life: digital twins facilitate easier repair and maintenance by providing readily available service information, encouraging consumers to keep products in use for longer.
• Efficient recycling and repurposing: detailed material composition data within the DPP allows for more efficient sorting and recycling processes, maximizing the potential for materials to be reused in new products.
• Responsible production: greater inventory visibility, powered by digital twins, allows brands to manufacture more efficiently and avoid overproduction, a big issue that the industry faces today. Research commissioned by Avery Dennison reveals that overproduction and waste are exacerbating the supply chain crisis, hitting businesses to the tune of 3.6% of their annual profits.^[1]

The commercial imperative: embracing transparency as a competitive edge

Harnessing the DPP and digital identification solutions benefits businesses in many ways. Here’s how:

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These commercial opportunities are already being realized by businesses. In January 2024 Avery Dennison partnered with European bedding giant Aquinos Group and TripleR as part of a landmark initiative to drive item-level traceability for one million mattresses by 2027. This partnership will allow Aquinos Group to be a frontrunner in creating product passports for circularity before the specific rules for mattresses begin to apply.

The DPP aligns perfectly with the EU’s renewed purpose to make policies that advance sustainability while preserving competitiveness.

Avery Dennison is also working with TEXAID, a European textile sorter, to use digital identification technologies to speed up textile sorting based on the garment’s material composition.

The road ahead: collaboration is key

One of the tools to sustainably empower the EU’s new industrial strategy should be the DPP. Given that the data required for the DPP must be captured at different points, success hinges on collaboration across the entire value chain. Avery Dennison’s policy priorities clearly demonstrate our commitment to working closely with businesses across the value chain, policymakers and other stakeholders to ensure a smooth transition and, in doing so, maximize the benefits of DPPs.

The DPP can be a springboard for a more sustainable and profitable future, if implemented effectively. Simply put, it is an opportunity that businesses must embrace.