For the manufacturing businesses that are cognisant of the EU’s upcoming Ecodesign for Sustainable Products Regulation (ESPR), many have defaulted to approaching it as a compliance exercise, a new set of rules and requirements to be met, potential investment, and looming deadlines.
Having come into force in mid-2024 to make sustainable products the norm in the EU, businesses globally have been getting to grips with who the ESPR will impact and the requirements for compliance, most notably the implementation of Digital Product Passports (DPPs) for certain products placed in the EU market, such as the sale of furniture in the region.
While that is not incorrect, other more forward-thinking businesses are beginning to see beyond the obligation, to the opportunities that the preparation for compliance – particularly its DPP mandate – can surface, alongside some of the major shifts that will come to their industries.
Below I note down five changes and opportunities that will become clearer as businesses go through this exercise in the coming months and years:
1. The scarcity business model will move towards extinction
Some business models within the manufacturing industry have relied on limiting the circulation of surplus goods to protect pricing and margins. In practice, this can lead to the destruction of unsold furniture items, rather than their recirculation through secondary markets. Under the ESPR, the destruction of unsold apparel, clothing, accessories and footwear will be banned, which opens up the potential for other sectors to face the same rules. Considering the EU’s goals to create a more circular marketplace, banning the destruction of perfectly good products is a logical place to start.
The introduction of DPPs creates a paper trail that makes quiet non-compliance more difficult. For any business built on a scarcity model, they will need to rethink how they create perceived value well-ahead of the compliance deadlines.
2. DPP readiness will become the unlikely advantage for public sector tenders
As sustainability performance increasingly becomes essential for formal tenders in the public sector, populating DPPs will become a strategic advantage for businesses who move quickly. Many tenders are now looking closely at environmental proof, something that will only accelerate with the EU’s upcoming Public Procurement Act, which will require businesses to evidence sustainability credentials.
While more details are still to come later this year, it’s clear that verifiable product-level data will become more necessary. The effort to populate DPPs with such data to comply with the ESPR will start to become the very thing forward-thinking businesses will use to get ahead of upcoming procurement requirements too.
3. Compliance now starts with design teams
Traditionally, product design and compliance have been separate functions, with designers making decisions about materials and sourcing, and compliance teams reviewing the product once designed as a ‘checkpoint’ function. With the ESPR emphasising that “much of a product’s environmental impact is determined at the design stage” it’s expected that the legislation will break the current model to either incorporate more compliance checks throughout the design process, or for design teams to become ‘compliance trained’ themselves.
4. It inadvertently just created a better system for product recall
While product recall is not what the ESPR set out to improve, the process of preparation is creating inadvertent benefits. Many businesses are undergoing a large-scale operational overhaul to map where their data is stored, what information they hold, as well as what their suppliers and partners hold to begin structuring this data and populating DPPs.
While this work is taking place to uphold sustainability goals, it’s consequentially creating a solution to the longstanding issues of fragmentation that have been felt with product recall. The clean, structured product data, improved traceability, and richer lifecycle data accessibility creates a perfect bedrock for a product recall system that enables businesses to source and identify batches that are affected with ease if an issue emerges.
5. Verified sustainability will provide a platform for stronger customer engagement
For many years sustainability claims have been woven into marketing materials and brand promises with little evidence to support it. This has in-turn had a deep impact on consumer trust, becoming more aware of “greenwashing” and unsubstantiated claims. The ESPR and its DPP mandate means that these purely performative businesses now have nowhere to hide, but also that those who are actually being responsible can verify their claims.
For the first time, consumers, contractors and procurement teams can access product-level sustainability data, with potential access to everything from the carbon footprint of its production to how it should be disposed of responsibly.
Manufacturers who see DPPs as an opportunity to create tangible benefits, rather than simply a compliance cost, have the most to gain. By implementing them early, there are huge opportunities for improvements in areas such as in product recall and streamlined procurement.
