Brought to you by Stephan H. Multhaupt from CSCP
The transition to a regenerative and circular economy requires innovative tools like Digital Product Passports (DPPs) to enhance transparency and traceability across product lifecycles.
However, beyond their technical capabilities, the real impact of DPPs on sustainability must be rigorously assessed. This article argues for the integration of frameworks like Doughnut Economics, Multicapitalism, and Life Cycle Assessment (LCA) to evaluate whether circular activities contribute to operating within the planetary boundaries. It highlights the role of DPPs in managing critical raw materials (CRMs) to support the energy transition, as outlined by CE-RISE.
Additionally, it addresses the need to mitigate rebound effects from scaling circular business models, which can counteract environmental gains. By embedding contextualised impact metrics, DPPs can ensure that circular strategies not only reduce waste but also foster long-term ecological balance and social equity.
Introduction
As we face increasing ecological pressures, transitioning to a circular economy becomes essential for reducing resource extraction and minimizing environmental degradation. Tools such as Digital Product Passports (DPPs) offer a critical mechanism for transparency in managing the lifecycle of products. DPPs support circularity by providing detailed information about product components, enhancing their reuse, repair, and recyclability. However, to ensure their effectiveness, we must rigorously assess their impact through established frameworks such as Doughnut Economics, Multicapitalism, and Life Cycle Assessment (LCA) (Raworth, 2017; McElroy & van Engelen, 2012).
In addition, understanding and mitigating potential rebound effects from scaling circular business models is crucial. Even with circular economy strategies in place, increased consumption or expanded market reach could counteract environmental gains. This underscores the need for comprehensive measurement beyond resource efficiency (Santarius, 2012). The integration of DPPs into managing critical raw materials (CRMs) is an example of how DPPs can help mitigate supply risks in line with the European Union’s energy transition goals.
The role of Digital Product Passports in circular economy
Digital Product Passports provide essential data throughout a product’s lifecycle, from raw material sourcing to end-of-life recycling. As highlighted by CE-RISE, DPPs play a pivotal role in managing the supply of critical raw materials (CRMs) by offering traceability and transparency, which are key to promoting reuse and recycling. This capability is increasingly relevant as industries grapple with CRM shortages amid global supply chain disruptions. DPPs, when integrated into product life cycles, contribute to sustainable resource management by ensuring materials such as rare earth metals are recovered and reused, reducing dependency on primary extractions.
However, to fully assess whether DPPs are truly promoting sustainability, they must be measured within broader frameworks such as Doughnut Economics. This model emphasizes that human economic activities must stay within an ecological ceiling (to avoid environmental degradation) while also meeting basic human needs (Raworth, 2017.) For instance, DPP-enabled circular activities should aim to reduce resource consumption while simultaneously promoting equity in access to resources. Moreover, the Life Cycle Assessment (LCA) approach is essential here, as it allows for a comprehensive evaluation of environmental impacts across a product’s life cycle—from raw material extraction to end-of-life disposal or recycling (Hellweg & Milà i Canals, 2014.)
Life Cycle Assessment (LCA) and its relevance to DPPs
Life Cycle Assessment (LCA) is a tool used to quantify the environmental impacts associated with all stages of a product’s life cycle, providing a detailed analysis of a product’s sustainability performance. When integrated with DPPs, LCA can provide accurate, data-driven insights into the actual environmental benefits or drawbacks of circular activities. For example, DPPs could track the material composition, energy use, and emissions of products, enabling more precise LCA calculations.
However, LCA must account for potential rebound effects when circular business models scale. For instance, while extending the lifespan of products like electronics through refurbishment may reduce waste, scaling such business models might result in increased overall consumption due to lower prices or higher availability, inadvertently increasing resource demand (Santarius, 2012). Understanding these rebound effects is crucial to ensure that the environmental benefits of circular activities are not negated by unintended consequences. DPPs, in this context, can help monitor and assess these outcomes, supporting more balanced strategies for scaling circular business models.
Multicapitalism and contextualised impact metrics
Multicapitalism, as outlined in the r3.0 White Paper, shifts the focus from solely financial capital to include natural, social, human, and intellectual capital (McElroy & van Engelen, 2012.) This holistic approach is vital for evaluating whether circular activities, including those supported by DPPs, contribute positively across multiple types of capital. In practice, DPPs should enable stakeholders to measure and report on the impacts of circular strategies not just on the environment, but also on social equity, local economies, and worker rights.
For example, CE-RISE highlights the role of DPPs in improving material transparency for products that rely on critical raw materials, such as permanent magnets found in renewable energy technologies. By providing detailed information on a product’s material composition and lifecycle stages, DPPs support more sustainable resource use and recovery processes. In this context, Multicapitalism encourages a broader understanding of sustainability that considers not only ecological but also social and economic impacts.
The UN Sustainable Development Performance Indicators (SDPI)
The UN’s Sustainable Development Performance Indicators (SDPI) provide a structured framework for measuring progress toward the Sustainable Development Goals (SDGs). By integrating SDPI metrics into DPPs, organizations can monitor their contributions to goals such as responsible consumption and production (SDG 12) or climate action (SDG 13) (UNRISD, 2020). These metrics are essential for assessing the broader impact of circular activities beyond individual products or companies, helping to align circular economy efforts with global sustainability objectives.
The gap: rebound effects and the need for holistic assessment
Despite the promise of DPPs and circular business models, a significant gap remains in understanding the full impact of these activities. Rebound effects—where resource savings in one area lead to increased consumption in another—must be carefully managed to avoid undermining sustainability goals. For instance, while product longevity may reduce e-waste, lower prices from business model scaling could increase the overall consumption of electronics, leading to higher energy use and material extraction (Santarius, 2012.)
Additionally, many current assessments of circular activities focus on efficiency metrics (e.g., lower emissions or reduced water use) without fully considering whether these activities operate within local or global ecological thresholds (Rockström et al., 2009.) To close this gap, circular strategies must integrate contextualized impact metrics that consider regional limits and the broader planetary boundaries framework (McElroy & Thomas, 2015.) DPPs can help provide the necessary data for such assessments, but a comprehensive, multi-capital approach is required to ensure sustainable outcomes.
Conclusion
Digital Product Passports (DPPs) are essential tools for advancing a circular economy, providing transparency and enabling more sustainable product lifecycles. However, to fully realize their potential, DPPs must be integrated with frameworks such as Doughnut Economics, Life Cycle Assessment, and Multicapitalism to assess their impact on ecological and social systems.
Moreover, it is essential to understand and mitigate rebound effects that may arise from scaling circular business models. By employing contextualized, multi-capital metrics, DPPs can ensure that circular activities contribute to a sustainable future within the planetary boundaries (Raworth, 2017; CE-RISE, 2023; McElroy & van Engelen, 2012.)