Preliminary remarks:

This is an interview dated 7 December 2023 with Frédéric Montagnon (co-founder of Arianee) published in Luxus+, which prompted me to learn more about the Digital Product Passport (“DPP”): first, to understand its rationale and the role of European institutions, which are central in the current electoral context (I), and second, to analyse its impact on luxury brands, to which I have dedicated most of my professional career in the field of intellectual property law (II).

I. The origins of the DPP

The Green Deal: presented by the European Commission on 11 December 2019 and approved by a large majority of the European Parliament on 15 January 2020, it is backed by a €503 billion investment budget and aims to significantly transform the EU economy in order to achieve carbon neutrality by 2050. Ursula von der Leyen, head of the European executive since 2019, defined the Green Deal as the EU’s new growth strategy and made it the number one priority of her mandate, requiring all European actions and policies to contribute to its objectives.

Alignment with the climate neutrality objective is enshrined in the European Climate Law, which establishes a scientific advisory board composed of experts responsible for assessing the compliance of all European legislative proposals with the objectives of the 2015 Paris Agreement and the EU environmental strategy.

In this context, on 30 March 2022 the European Commission put forward a series of legislative proposals aimed at promoting sustainability, circular economy principles, and energy efficiency of products throughout their life cycle. Among these proposals was the Ecodesign for Sustainable Products Regulation (“ESPR”), the key pillar of which is the digital certificate intended to ensure traceability, transparency, and authenticity, thereby giving rise to the Digital Product Passport (“DPP”).

The ESPR Regulation was adopted on 23 April 2024 by the European Parliament and on 27 May 2024 by the Council.

It makes the existence of a DPP a condition for placing on the EU market all products covered by the ESPR. The final list of such products has not yet been defined by the Commission, but already includes four priority sectors: batteries, textiles, electronics, and construction. In the clothing sector, the rollout of the Digital Product Passport is expected by 2026.

II. What impact on luxury brands?

While it serves virtuous objectives, the DPP is nonetheless binding in terms of both its content (a) and its functioning (b), as defined by the ESPR draft regulation. This therefore raises the question for luxury brands of how to reinvent themselves in order to turn these constraints into opportunities (c).

a) Content of the DPP

The key product data required to create the Digital Product Passport will be recorded online in a register established by the European Commission, with the aim of making it widely accessible. The DPP would therefore take the form of a digital document detailing various aspects of a product, including in particular:

- Its precise identity, including its serial number, unique identification code, as well as information on the manufacturer and country of origin;

- The detailed composition of the product and the geographical origin of the materials used, together with specifications such as the proportion of recycled materials;

- Its environmental impact assessment, including an eco-score, carbon footprint data, biodegradability, and the potential presence of polluting substances;

- Information on repairability and recyclability options, including collection methods and end-of-life treatment processes for the product.

b) Functioning of the DPP

To comply with the ESPR regulation, each product placed on the European Union market will have to be equipped with one or more data carriers such as a barcode, QR code, or RFID chip, storing the relevant data and allowing quick access to the passport information.

The DPP would be linked to a unique product identifier, accessible via a data carrier embedded in the product itself, its packaging, or associated documents. The DPP will be accessible to all actors in the value chain (suppliers, manufacturers, distributors, repairers, and consumers), as well as to EU Member State enforcement authorities such as customs and the DGCCRF. Each stakeholder will have regulated access to the DPP by scanning the product’s data carrier.

Through the creation and updating of this European register, the DPP aims to ensure traceability of the various stakeholders, locations, and stages of the product’s value chain throughout its entire lifecycle. Each time a new product is placed on the market, the manufacturer or importer will be responsible for enriching the information.

As regards the choice of technology, the Commission has not issued specific guidance. It will be up to companies to determine the method used to link the physical product to its DPP. Various secure technologies may be considered for storing this information, such as a centralised database or blockchain. Tokenisation appears, according to a study jointly published in January 2023 by the Boston Consulting Group and Arianee, to offer the most advanced capabilities to achieve the DPP’s objectives, particularly in terms of data storage, accessibility, and security.

c) Opportunities: new horizons for luxury clients and brands?

Luxury is an invitation to travel: luxury brands have long understood this, deploying sensory marketing strategies designed to enhance the experience of purchasing a luxury product. By stimulating customers’ emotional intelligence, brands succeed in attracting and engaging them. The evocation of one or more of the five senses—sight, hearing, smell, taste, and touch—aims to influence purchasing behaviour by reviving memories and creating desire.

Will the DPP withstand the AIDA marketing model developed by American businessman Elias St. Elmo Lewis in 1898, under the acronym AIDA: “Attention / Interest / Desire / Action”?

Will providing customers with comprehensive knowledge about a luxury product strengthen their interest in it without dampening their desire or discouraging the act of purchase, even though the appeal of luxury products often lies in the mystery of ancestral craftsmanship?

Luxury brands will need, through the DPP, to tell their product stories differently and offer new horizons to environmentally conscious consumers. The DPP is a guarantee of compliance with European regulations; by promoting transparency and accountability, it gives companies the opportunity to tangibly improve their brand image and competitive positioning while avoiding greenwashing.

In the luxury sector in particular, the potential is significant as a certificate of authenticity, since combating counterfeiting is a sustainable initiative that goes beyond mere brand reputation: counterfeit goods are the product of a shadow economy that disregards all regulations, relying on machines and materials that are often hazardous and highly polluting.

Moreover, once counterfeit goods are seized by law enforcement authorities, they are often destroyed by incineration. This process reduces waste by decomposing materials through oxidation. However, toxic emissions resulting from combustion generate atmospheric pollution that is harmful to both health and the environment.

Thus, the DPP transforms consumers of luxury goods into active participants in a virtuous trade of authentic products from transparent and ethical supply chains, enabling them to verify product authenticity through data integrity and full traceability throughout the product lifecycle.

Furthermore, tokenisation on the blockchain (see above), which allows the physical asset represented by the luxury product to be valued and materialised in the digital world through the DPP, opens new horizons for luxury brands. They could potentially commercialise the DPP in the form of a token alongside the luxury product, giving it a new dimension.

The ESPR Regulation will enter into force on the twentieth day following its publication in the Official Journal of the European Union. It will apply 24 months after its entry into force.

Sources :

https://www.gs1.fr/passeport-numerique-produits

https://fr.euronews.com/next/2024/04/03/passeport-numerique-des-produits-de-lue-quelle-definition-et-quel-impact

https://www.adoneconseil.fr/actualites/le-luxe-se-prepare-au-passeport-numerique-des-produits

https://www.forbes.com/sites/forbestechcouncil/2024/01/16/digital-product-passports-are-coming-heres-how-fashion-companies-can-prepare/

https://www.protokol.com/insights/how-digital-product-passports-can-enhance-product-authenticity/

https://www.touteleurope.eu/environnement/qu-est-ce-que-le-pacte-vert-pour-l-europe/

https://geoconfluences.ens-lyon.fr/informations-scientifiques/dossiers-regionaux/territoires-europeens-regions-etats-union/articles-scientifiques/pacte-vert

https://helloplanet.tv/actualites/titre/

https://www.mytotalretail.com/article/the-knockoff-effect-the-hidden-environmental-and-social-impact-of-counterfeit-goods/

https://susproc.jrc.ec.europa.eu/product-bureau/product-groups/635/documents

https://hadea.ec.europa.eu/calls-proposals/digital-product-passport_en

https://www.consilium.europa.eu/fr/policies/green-deal/ https://www.linkedin.com/pulse/comment-le-digital-product-passport-va-t-il-r%C3%A9volutionner-la-tra%C3%A7abilit%C3%A9-qeikc/

https://fr.fashionnetwork.com/news/Passeport-numerique-des-produits-quel-potentiel-pour-la-mode-et-le-luxe-,1502961.html

i Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021.

ii See the international treaty adopted by consensus by 197 parties on 12 December 2015 at COP 21 under the United Nations Framework Convention on Climate Change (UNFCCC), which entered into force on 4 November 2016.

iii Proposal for a Regulation of the European Parliament and of the Council COM (2022) 142 final 2022/0095(COD) of 30 March 2022 establishing a framework for setting ecodesign requirements for sustainable products.

publications

A digital passport for luxury products: toward responsible consumption in Europe

GCG Deal Announcement | Baldi Finance spa and Baldi & Partners advised Novastone Capital Advisors

GCG Deal Announcement | Baldi Finance spa and Baldi & Partners advised ALBA S.r.l.