This article was the Topic of the Week of Week 49 in the 2025 newsletter.

The German economy is highly reliant on raw material imports: recycled materials account for just around 14 percent of raw material use in Germany according to the latest figures from the EU Commission. While Germany's recycling rate still exceeds the EU average of approximately 12 percent, countries like the Netherlands achieve around 32 percent. To reduce dependency on primary raw materials and strengthen economic resilience, Germany aims to drive transformation towards a resource-efficient and circular economy. A key role in this will be played by the Digital Product Passport (DPP), which serves as a digital identity card for a physical product, compiling structured data about its entire lifecycle. Future DPP information will include product origin, composition, repairability and disassembly options, as well as recycling and disposal options at the end of the lifecycle.

Ambitious Timelines

The first DPP – for batteries – is drawing closer: According to the current EU work plan, the so-called Battery Passport is set to be completed by the end of 2025 for application from 2027. It is concerning that two-thirds of companies are still unaware of the DPP, even as delegated acts for textiles, tyres, as well as iron and steel, are planned for implementation in 2027 and 2028.

From 2028 onwards, the product passport obligation is expected to extend to other product groups such as furniture and toys. At the same time, an EU-wide DPP database for registering digital product keys (the "Unique Identifier") is planned, along with the establishment of system standards. For many companies, this timeline still poses numerous unresolved questions: How can preparations be made? Where does registration take place? What is the economic benefit?

Clear Opportunities and Risks

The DIHK survey on the circular economy conducted in 2024 highlights that businesses familiar with the DPP largely see it as an opportunity. Rightly so: it has the potential to increase transparency along the value chain, enhance access to product-specific data, and thereby promote material cycles. The DPP offers specific practical benefits for companies, allowing for traceability of material consumption leading to more efficient material usage. Additionally, digitally stored information can streamline support processes.

Currently, there is still uncertainty about the exact DPP structure. What is known is that it will consist of three components: product identification (the "Unique Identifier"), product description containing information about manufacturers, and environmentally relevant details such as ingredients. To avoid becoming the bureaucratic construct feared by critics, a holistic concept with data interfaces integrating existing databases, like the one for energy-relevant products, and avoiding redundancies is required.

Encouragingly, the European Committee for Standardization (CEN) aims to develop a DPP standard by the end of the year. This would provide standards that could dispel uncertainties. However, the success of the standard will depend significantly on whether the perspectives and needs of small and medium-sized enterprises (SMEs) are considered.

Better Simple than Complex

The Digital Product Passport can become a vital tool for the circular economy – provided it is designed with minimal bureaucracy and in a SME-friendly manner. This requires accessible data for stakeholders, enhanced infrastructure for secondary raw material recovery, and an increased market supply and demand for secondary raw materials. For instance, it would be crucial to mandate the DPP in public procurement processes to facilitate raw material reuse and close material cycles at the federal, state, and municipal levels.