Brought to you by Joshua Aseto from CSCP 

A new era of supply chain transparency and sustainability 

As the European Union (EU) advances its transition toward a circular economy, the introduction of the Digital Product Passport (DPP) marks a pivotal shift in supply chain transparency and sustainability. A key component of the Ecodesign for Sustainable Products Regulation (ESPR), the DPP is poised to revolutionise how products are tracked, traced, and assessed for environmental and social impact. 

The DPP initiative aligns with the EU’s Circular Economy Action Plan, aiming to reshape cross-border commerce by enhancing product sustainability and traceability. While its primary focus is the EU market, the DPP’s influence extends far beyond European borders, with significant implications for global supply chains, particularly third-country suppliers. 

The EU’s upcoming regulations, including the ESPR and Battery Passport Regulation, will mandate DPPs for specific product groups starting in 2027, underscoring the urgency for businesses to adapt. 

What is the Digital Product Passport (DPP)? 

The DPP is a digital record containing key sustainability and lifecycle data for products sold within the EU. It will offer unprecedented levels of transparency and traceability, allowing businesses, regulators, and consumers to access essential product information. 

Key aspects covered in the DPP: 

✔ Material composition and recyclability 
✔ Environmental footprint across the supply chain 
✔ Repairability and durability information 
✔ Social compliance and ethical sourcing 

Manufacturers, importers, and distributors must integrate the DPP into their products, ensuring real-time traceability and compliance with EU sustainability standards. Beyond regulatory compliance, DPPs create opportunities—enhancing consumer trust, unlocking new revenue streams, and strengthening market competitiveness. 

Impact on third countries in global supply chains 

For third-country suppliers—many of whom provide raw materials, components, or finished products for EU markets—the DPP presents both challenges and opportunities. 

1. Compliance with EU sustainability standards 

Non-EU suppliers must align their operations, materials, and production processes with the EU’s stricter environmental and social requirements. This includes: 

• Reducing carbon footprints across the supply chain. 

• Ensuring ethical labor practices and social compliance. 

• Tracking sustainability metrics for exported goods. 

Industries with complex supply chains, such as batteries, electronics, and textiles, rely heavily on raw materials from third countries (e.g., batteries sourced from China). A key concern is whether international stakeholders will cooperate in providing the necessary data for DPP compliance. 

Additionally, overlapping regulations create a complex compliance landscape. For example, textiles equipped with NFC tags are classified as electronic devices under the WEEE Directive, adding another layer of regulatory requirements. 

2. Increased data and reporting demands 

The DPP mandates comprehensive digital documentation of supply chain data. This will require third-country suppliers to invest in IT infrastructure, data collection, and reporting systems—which may be costly for SMEs (small and medium enterprises) in developing economies. 

• Data security concerns: The digital nature of the DPP raises data security and privacy challenges. Companies must adopt robust cybersecurity measures to protect sensitive information. 

• Interoperability challenges: The DPP will need further standardisation to ensure global acceptance and cross-border compliance. 

3. Strengthening market access and competitiveness 

While challenging, DPP compliance also presents opportunities. Suppliers that successfully integrate DPP frameworks will gain a competitive edge in EU markets, positioning themselves as preferred partners for sustainable and transparent sourcing. 

✔ Enhanced visibility in EU markets 
✔ Stronger relationships with European buyers 
✔ Long-term cost savings through improved supply chain efficiency 

4. Need for capacity building and support 

For a fair and inclusive transition, third-country suppliers—especially SMEs—will need financial and technical support. Governments, industry groups, and international organisations must collaborate to provide: 

• Training on DPP compliance 

• Access to digital traceability tools 

• Financial incentives for SMEs 

Regulatory enforcement: The role of customs and market surveillance authorities 

The DPP framework relies on strict enforcement mechanisms, particularly through Customs and Market Surveillance Authorities (MSAs). 

Customs authorities: Ensuring compliance at EU borders 

As per the Draft ESPR, EU customs officials will: 

• Verify whether a DPP is mandatory for the product. 

• Check the unique product identifier via the EU Single Window Environment for Customs. 

• Ensure the customs declaration matches the DPP registry data. 

Per Article 13(3) of the ESPR, customs may only release a product for free circulation if its unique registration identifier and commodity code match the DPP records. Customs authorities may also retrieve DPP data for risk management, regulatory controls, and trade compliance. 

Market surveillance authorities (MSAs): Strengthening regulatory oversight 

MSAs will perform compliance checks through: 
✔ Random inspections of physical products 
✔ Verification of online marketplace listings 
✔ Testing products for sustainability claims 

To ensure effective enforcement, MSAs require automated access to DPP data and advanced analytics tools. Given the varying IT capabilities across EU Member States, the DPP system must be adaptable to different regulatory and technological environments. 

Looking ahead: What’s next for third-country suppliers? 

The EU’s DPP initiative is set to reshape global trade, making sustainability a prerequisite for market access. 

To stay competitive, third-country suppliers must: 
✔ Invest in sustainable production and supply chain transparency. 
✔ Upgrade digital systems for DPP data compliance. 
✔ Engage with EU regulatory bodies to stay updated. 

The need for global collaboration 

DPPs are gaining high international interest, highlighting the need for global alignment of standards. Policymakers must foster dialogue and knowledge-sharing to: 

• Ensure DPP interoperability across borders. 

• Prevent trade barriers for developing economies. 

• Strengthen global supply chain resilience. 

Advancements in AI and IoT are expected to further enhance DPP efficiency and scalability, driving circular economy innovations worldwide. 

Final thought 

The Digital Product Passport is more than just a compliance tool—it represents a fundamental shift toward sustainable, transparent, and circular trade. Businesses that proactively adapt will not only ensure compliance but also gain a competitive advantage in the evolving global marketplace.