The European Commission is currently discussing the details of the Digital Product Passport (DPP), which will enable improved transparency around the regulation of certain products, including car batteries and luxury and electronic goods. This Passport could be enacted in the coming years and will allow consumers to obtain transparent and detailed information about the products they buy.
The latest Boston Consulting Group (BCG) report, commissioned by blockchain technology startup Arianee, highlights the following core ideas:
- Authenticity and circularity as keywords: with 34% of luxury goods consumers wary of counterfeits (True-Luxury Global Consumer Insight, 2020, BCG), the Digital Product Passport could become a certificate of authenticity and ownership. This would not only combat counterfeiting, but also enhance the secondhand luxury goods market. Indeed, the Passport is intended to accompany products throughout their lifecycle by, for example, enabling various repair phases to be traced or facilitating the recycling of complex parts such as batteries. This would respond to a demand from consumers of electronic and household appliances, 30% of whom say they are willing to purchase brands in order to have access to repair solutions (Creating the Consumer DNA, 2022, BCG).
- A tool for consumer communities: the Digital Product Passport may also become a preferred communication channel between brands and their communities, as a medium for promotional information or personalized invitations.
- Which technology should be used? Europe has not yet given any guidelines on which technology to use. Companies will therefore have to decide for themselves how to link the physical product and the Digital Product Passport. Many technologies can be used to store information (centralized database, blockchain, etc.), but tokenization alone appears capable of unlocking the Passport’s most ambitious functions, such as data storage, accessibility, data security, and access to additional services.
Although the Digital Product Passport seems promising, two challenges remain: (i) aligning all relevant parties with regard to the definition and regulation of the Passport and (ii) identifying the appropriate technology to ensure efficient and effective implementation.
