Textile supply chains are the new battleground in the fight against climate change. By enforcing new regulations for circularity and sustainability, the European Commission hopes it will create a greener and more competitive industry.
Given the sector has the fourth highest impact on the environment and climate change after food, housing, and mobility, this matters more than many might think. And Digital Product Passports (DPPs) will drive the policy.
For apparel, footwear, and fashion brand owners, manufacturers, and private brand retailers, this is where the hard work starts. With just a few years before mandatory digital identities must be attached to all textiles sold in Europe, the race is on to put the right governance frameworks – and underlying systems, processes, and technologies – in place.
Making Fashion Greener
The fashion industry is one of the most polluting in the world. According to the European Commission, the EU generates 12.6 million tonnes of textile waste per year. Clothing and footwear account for the equivalent of 12 kg of waste per person annually. It claims that only a fifth (22%) of post-consumer textile waste is currently collected separately for reuse or recycling. The remainder ends up in landfill sites or is incinerated.
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The commission’s answer is DPPs; the key pillar in its EU Strategy for Sustainable and Circular Textiles. Alongside a similar initiative for electronics and batteries, it wants textile stakeholders to use DPPs to enhance supply chain traceability and transparency and nurture more sustainable manufacturing practices. Crucially, product passports will also empower consumers with the product information they need to make more sustainable purchasing decisions.
It’s all about pushing the industry through regulation to transition to a more circular production and consumption model, characterized by recycling and reuse – to extend the lifecycle of products as far as possible. And as the regulatory mandate will also affect non-EU brands selling in the EU market, it’s hoped the initiative will have a real and positive impact on the circularity of the global fashion industry.
How Will DPPs Work?
At the time of writing, the specific data and hardware requirements/protocols are still being finalized. But expect a DPP system to include some combination of scannable QR codes, RFID tags, and blockchain technology to create a unique and secure digital ID for each product.
Those tags and scannable codes will provide buyers with access to the underlying supply chain information on each product contained within the DPP. Think about information including the materials it contains, their recyclability, where the product was manufactured, and any other steps in its lifecycle. Blockchain is being touted as able to provide a secure, low-cost, and tamper-proof way to collect this critical information across the supply chain using digital ledger technology.
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This is not to say there won’t be challenges. It’s unclear how DPP systems will be harmonized across borders, especially for larger players with locations and suppliers around the world. Fashion businesses across the supply chain will need to invest significant amounts in staff training and new IT systems. But German fashion sector players should already have begun upgrading their information management across supply chains after the introduction of the Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz – LkSG) last year.
The Technological Foundations
Although the LkSG is designed around labor rights rather than sustainability, it requires companies to enhance transparency in their supply chains through rigorous, regular risk assessments and documentation. The collection of relevant certifications, and other associated data, for brands, suppliers, and products through automated cloud-based systems chimes with the kind of requirements DPPs will place on these same businesses.
Data Collection
Businesses will need a system that streamlines and standardizes data collection – extracting relevant information from multiple decentralized sources, and automatically structuring it into an appropriate format for the DPP. This would include, first and foremost, certificates confirming that materials and items have been sourced, treated, and produced in a compliant way – for instance, tracking the origins of the cotton in a shirt, how and where it was spun and dyed, and its route through production to the warehouse and eventually high-street or virtual store. But the systems will also need to capture aspects such as production and purchase volumes, dead stock, and much more. It’s about creating a single source of truth for everything.
Cloud-based Platforms
Cloud-based platforms are the best fit for this job; offering ease of management and syncing of data across multiple systems – as well as a regularly updated feature set that can move in line with evolving regulatory demands. Where businesses are running multiple, distinct production, management, and manufacturing systems, they will need connecting so that data can flow freely through and between them. This will be necessary to extract material composition details down to a highly granular supplier and sub-supplier level. Integrations with specialist trackers of environmental data may also be useful.
Analytics
The latest data analytics systems – data lakehouse technology – deliver superior capabilities to businesses in enabling non-technical experts to extract intelligence from vast amounts of unstructured data without needing to organize or structure it. In the context of Digital Product Passports, these analytical tools can support environmental reporting and compliance.
One Step Beyond
Fashion industry players may benefit even more from technology solutions that have been designed and built to handle the demands not only of their industry but also of micro-sectors. Consider providers that offer highly tailored products for textiles, accessories, and so on. Integrated systems that span entire supply chains from sourcing raw materials to production and delivery will make it easier to share data and avoid information silos.
That’s plenty to think about, but there’s also plenty to be excited about. DPPs may be mandatory, but fashion stakeholders that take the lead have a great chance to enhance consumer trust, brand reputation, and customer insight – and even devise new business models built around circularity. Given the complexity of fashion supply chains, this will be no easy feat. But the commercial prize is there for the taking for those firms that can successfully balance minimized environmental impact with operational excellence.
