The concept of the circular economy is gaining more and more prominence on the agendas of policymakers and industry alike. This is evidenced, e.g., by the new Circular Economy Action Plan of the European Union and a growing body of research substantiating that the circular economy is gaining importance for businesses.
Examples include diverse players such as French car manufacturer Renault as well as Accenture Strategy – an Irish-based multinational consultancy –, the European Union, and the Ellen MacArthur foundation – a UK registered charity dedicated to developing and promoting the concept of a circular economy in collaboration with different stakeholders –, to name but a few.
There is still discussion on the potential impact of circular economy on climate goals. However, there is growing evidence that a successful transition to a circular economy would put the world on a path below two degrees by 2032 and help create a society in which resources are used and reused efficiently.
Digitalization is affecting us – everyday, almost everywhere
Almost in parallel to the evolution of circular economy concepts, digitalization has been affecting more and more areas of our personal and professional lives. It has become an integral part of everyday life almost everywhere. In the Fourth Industrial Revolution (IR 4.0), the digitalization of product information will become just as important.
As part of its Circular Economy Action Plan, the European Commission is working towards establishing sustainability principles and other appropriate ways to regulate multiple aspects of product life cycles with the aim to improve durability, reusability, upgradability, and reparability of products, as well as addressing the presence of hazardous chemicals in products, and increasing their energy and resource efficiency. One of the aspects mentioned in the Action Plan relates to ‘‘mobilizing the potential of digitalization of product information, including solutions such as digital passports, tagging and watermarks’’.
A digital passport for products
The Digital Product Passport (DPP), an emerging concept for achieving digitalization of product life cycles, may present an opportunity for circular economy adoption and scaling. The idea of having a digital passport for physical objects is not entirely new – as it has been discussed based on different terms and contexts, such as ‘‘digital twin’’, ‘‘environmental product declaration‘‘, and ‘‘material passport’’, a term that has been adopted in the building industry.
The Wuppertal Institute recently published a broad definition for DPP, defining it as a data set that summarizes the components, materials, and chemical substances in a product, and information on reparability, spare parts, and proper disposal instructions. According to their definition, the data contained in the DPP is collected from all phases of the product life cycle and can be used to optimize design, production, use, and disposal.
How to close the gap
Currently, however, the lack of consistent and precise information flow about resources, products, and processes in many cases makes it impossible to quantify circular initiatives. On the other hand, there are ongoing discussions about the degree of transparency and information sharing required to achieve circularity.
Digitalizing product and process information to cover the entire product life cycle is a challenge that needs to be addressed to close the gap between the concept of circular economy and its practical implementation.