A Sustainable Future: Using Blockchain for Digital Product Passports – Ledger Insights

This is a guest post by Dr Phil Brown from Circulatewhere he is VP for business development and strategy

The world is in crisis as the growing global population has strained the limits of what our planet can sustainably provide and renew. Without thinking about sustainability, the ability to meet the needs of current generations without compromising the needs of future generations, we risk depleting valuable resources, irreparably damaging our environment and jeopardizing our own future. Apart from the changing attitudes of consumers and forward-looking businesses, here are also some of the relevant regulations coming into place:

• Construction Products Ordinance: proposed in 2022
• EU strategy for sustainable and circular textiles: implemented in 2022
• EU Ecodesign for Sustainable Products: first adoption in 2024
• Corporate Sustainability Reporting Directive (CSRD): to be implemented in 2024
• New EU battery regulation: to be implemented in 2026
• Act on critical raw materials: first draft due in the first quarter of 2023

There are also major updates to a number of existing Extended Producer Responsibility (EPR) and other directives where traceability is a key focus area such as:

• The Packaging and Packaging Waste Directive
• Directive on scrapped vehicles
• Electrical and electronic equipment (EE) and waste electrical and electronic equipment (WEEE)
• The Conflict Minerals Ordinance: to be reviewed in 2023

We can no longer ignore the pressing issues. Our ability to achieve sustainability depends significantly on our ability to work together to reduce waste and environmental impacts, maximize efficiency, and also to ensure ethical practices that do not violate other people, land rights or the natural ecosystems and biosphere.

Digital product passports and blockchain can play major roles in creating a more sustainable future. Together, they offer a compelling solution to add more visibility, trust and knowledge of complex material flows within global supply chains. But how would they cooperate?

Your passport is a government-issued document that allows you to travel and return to your home country. It contains a lot of personal information about you and your country of birth, the visas you need to travel, and keeps an overview of all the countries you have visited.

Similarly, digital product passports also contain a range of information to track products throughout their entire life cycle from production to end-of-life disposal. This information can be used to ensure the correct procurement of materials, monitor sustainable manufacturing practices and simplify product life. At the end of use, a digital product passport is invaluable for disposing of products to increase the efficiency of material recycling and waste reduction. Digital product passports can also be used to engage with or reward stakeholders and customers for sustainable practices and behaviours.

Blockchain technology is already being used in many industries to improve transparency and traceability, and shows enormous potential to accelerate the transition to a circular economy. Due to the decentralized nature of public blockchains, unauthorized access and manipulation of data is impossible, making them highly reliable and trustworthy. However, because all transactions are visible to everyone on the network, this creates a lack of privacy that can be a major concern and barrier for businesses that want to keep certain information confidential and secure, for example sensitive data related to the composition of materials or products. Yet this is sometimes the exact data needed to facilitate circular innovation and recovery strategies.

Fortunately, methods to protect privacy have been developed and are already in use in commercial applications. Data can be kept confidential with zero-knowledge proofs, or by using smart contracts to secure off-chain references. Other cryptographic strategies such as ring signatures, homomorphic encryption, and public key encryption can also be used to ensure that only the intended recipient can access the specific data set when needed.

In summary:

1. Digital product passports offer a transparent way to track and manage product information, enabling governments, regulators, businesses and consumers to identify and verify the quality and origin of products.
2. Building digital product passports on public blockchain technology provides immutable records of ownership, origin and use, increasing trust and transparency in complex supply chains.
3. Zero-knowledge proofs, smart contracts, and other cryptographic strategies can be used to protect privacy, enabling transparency and trust without giving away sensitive or confidential data.

Digital product passports will undoubtedly become the norm for years to come, just as sustainability has become critical to long-term success. Companies that focus on sustainability can reduce operating costs, improve operations and reduce inefficiencies. At the same time, they can increase customer satisfaction and loyalty, increase the brand’s reputation and take advantage of the growing demand for sustainable products.

Creating a digital product passport requires dedication, planning, analysis and collaboration to ensure that all relevant information is accurately captured and stored. The work does not end with implementation. It must also be continuously monitored, analyzed and audited to identify any issues that need to be addressed, such as outdated or inefficient processes.

Realizing and implementing functioning digital product passport systems will be the first step on an innovation journey that will create new coherent ways of working. The full benefits of digital product passports will only be realized when they are scaled and interoperable across multiple value chains. The data and insights in digital product passports can then be used to inform material selection challenges, product design briefs and circular business models. In turn, these can facilitate customer interactions to promote sufficiency, product life extension and take-back operations to facilitate end-of-life recovery.

This is how we realize the circular economy’s vision that materials and products should flow end-to-end and back again through several loops of use and reuse. However, technological solutions alone will not deliver these full potential benefits; there is also a need to change the mindset around how, what, when and with whom to share data. This is why we work consistently to promote practical examples of what is possible when we combine digital transition with circular innovation and supply chain operations.

Circularise supports companies in their transition towards circularity. Our cutting-edge solutions protect your privacy and give your business a competitive edge. Sustainability can be an achievable yet profitable goal for your business as it scales.