The circular economy is a crucial component of a climate-neutral future. One of the main obstacles to building a circular economy is the lack of information transfer across supply chains. Without any or inadequate access to data about the origin, make-up and design of products, it is impossible for producers, consumers and recyclers to adopt more circular, sustainable practices. Aligning the ongoing green transition and digital transformation carries the potential to overcome this barrier.
The EU’s policies for enhancing information transfer across value chains is evolving quickly, as are new technologies. Today, online platforms, databases, apps, sensors, connected machines, QR codes, radio-frequency identification (RFID) and blockchain already make it easier to share data about a product's origin, design, repairability and future life cycle. Digital product passports (DPPs), in particular, show much promise. It is in Europe’s interest to build on the related business cases and opportunities now and create a policy and financial framework that enables the use of these and new digital tools for the benefit of establishing a more circular economy.
To do so, the EU should take the following actions:
- Establish a digital information system for a circular economy by 2030, enabling the exchange of information necessary to better design, reuse, repair and recycle products. It should lead the way towards building a global digital information system by 2040.
- Develop a common European data space(s) together with industry, member states, civil society and other relevant stakeholders. The common data space should build on all relevant existing datasets and needs to be customised for different value chains: electronics, the automotive sector, textiles, plastic packaging and chemicals.
- Establish rules on using digital product passports that build on the EU’s current efforts to develop common European space(s) and further specify which data should be made available via DPPs, for which product categories and how.
- Use its economic and financial tools to enhance digital information transfer in circular value chains. The Multiannual Financial Framework and Recovery and Resilience Facility should be used to invest in developing the necessary digital tools (e.g. blockchain, IoT), infrastructure and skills. The EU should consider how its sustainable finance agenda can help direct private investments towards digital information transfer for CE.
- Lead global efforts to use digital tools in support of information transfer for the circular economy. This entails collaborating with international partners in developing necessary rules and standards while considering minimum CE-related transparency requirements for products entering the EU single market.
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