How Digital Product Passports Strengthen Your ESG Reporting

ESG Reporting gives regulators and potential investors valuable insights into how a company performs in key areas. Specifically, its environmental impact (E), its social responsibility (S), and its governance practices (G).

Companies with strong ESG reporting and sustainability practices are also likely to be favoured more in the minds of customers, with studies in consumer trends showing that as many as 92%of consumers trust brands that present as environmentally-friendly, making those organisations more attractive for investors.

Using the insights from ESG reporting, investors can make better-informed decisions about the origins of a company’s financial performance, and regulators can more accurately assess an organisation’s sustainability in line with the law.

However, ESG reporting can be a struggle for many organisations due to the large amount of sustainability data often involved -this is where Digital Product Passports serve to strengthen ESG reporting mechanisms.

The Evolution of ESG Reporting?

Modern ESG Reporting began in 1987 with The Brundtland Report, which developed the guiding principles for sustainable development. Since then, ESG Reporting has gradually shifted from a voluntary practice adopted by leading companies to an absolute corporate necessity.

That shift reflects the importance of non-financial matters to a wide range of stakeholders and the role of business in society. In response, European legislators and regulators have issued mandatory reporting standards for all companies above a certain size.

However, the enforcement of reporting standards, including penalties for misleading statements or inadequate disclosures, is at an early stage.

European standards such as the CSRD (Corporate Sustainability Reporting Directive) and the CSDDD (Corporate Sustainability Due Diligence Directive) only became mandatory for certain companies in the past year and are already subject to delays and revisions, the so-called omnibus legislative process.

Therefore, case law regarding ESG Reporting enforcement remains very limited. In the meantime, courts have punished companies for more traditional breaches, such as data security or unsubstantiated claims about their products’ ecological advantages.

Regardless of these legislative developments, investors have already voted with their feet, consumers with their wallets, and employees with their career choices – this tells us that honest and comprehensive ESG Reporting is here to stay.

What are Digital Product Passports?

Building upon ESG Reporting, which concerns the whole company, comes product-level reporting.

A Digital Product Passport (DPP) is a digital record that consolidates essential information about a product’s identity, its compliance and safety matters, and certain sustainability-related features.

A DPP is connected to its product via a data carrier, such as a QR code, with the relevant information being accessible via an application to improve product traceability and simplify compliance.

The increased traceability provided by DPPs helps with the EU’s wider circular economy objectives, including repair, reuse, and recycling initiatives. The DPP records which raw materials have been used in the product, as well as end-of-life disposal guidance.

The consumer benefits of DPPs include easy access to information about a product’s origin, safety information, and lifecycle management. Other DPP use cases include lifecycle tracking, ownership verification and combating counterfeits.

Digital Product Passports play a key role in gathering and sharing ESG data across a product’s lifecycle, enabling seamless integration into ESG reporting practices.

Main DPP Legislation

DPPs stem from the EU’s Ecodesign for Sustainable Products Regulation (ESPR) and are necessary for compliance.

The implementation of DPPs follows a phased approach. The first product categories in the Regulation are those having significant environmental impacts - including steel, textiles, electronics, and furniture.

Pilot initiatives began in 2024, with full deployment expected by 2030 for the initially prioritised product groups. The European Commission will define specific DPP requirements for different product groups, and a central EU registry is anticipated in 2026.

Specifically, a delegated act on DPPs for textiles is expected to be published in 2026, with implementation around 2027-2028. Linked to this, the EU Commission will establish a digital registry to store unique DPP identifiers, anticipated in 2026. The first efficiency report on the ESPR’s impact will be released in 2030, with further reviews every six years.

Digital Product Passports in ESG Reporting

Under the EU regulations, many companies will be obliged to implement Digital Product Passports and to report their ESG progress under the CSRD. But how can Digital Product Passport data be used to inform ESG reporting?

DPP and ESG both focus on sustainability, but they operate under different goals and frameworks. The DPP focuses on product data transparency, whereas ESG concerns the company’s overall environmental, social, and governance responsibilities.

Although they have different starting points, DPP and ESG ultimately work toward the same goal: fostering responsible and sustainable business practices.

How Digital Product Data can Enrich ESG Reporting

1. Data collected for the Digital Product Passport can be used to improve ESG Reporting. For example, data on resource consumption, material selection, and the energy use to manufacture products can support the company’s disclosures about its environmental impact.
2. Certifications and compliance data in the DPP support corporate claims about regulatory standards, a component of the CSRD.
3. DPP data on the product's lifecycle can provide insights on how to optimise production processes, including waste reduction and other circular economy considerations.
4. DPPs can also provide insights about a product’s sustainability, which can substantiate sustainability claims directed towards business partners and final customers.

Closing Data Gaps with Digital Product Passports

Data gaps are a fact of life and should be anticipated in the DPP process. Companies will need to assess current data collection practices and identify gaps, such as missing repairability information, carbon footprint details, or recycling instructions. To create a complete picture of the product’s lifecycle, those data gaps will need to be filled.

Organising product data is already relevant for large companies subject to CSRD reporting requirements. Smaller companies, often supplying to those large companies, can already benefit from having such data well organised.

The ESPR states that all information included within product DPPs must be transparent and verifiable. A DPP solution provider can help to implement data quality practices to ensure that your data meets the required standards and generate easily readable audit trails to help regulators assess the company’s sustainability practices.

Therefore, DPP data is far more valuable than simply fulfilling compliance requirements. Using that data in other ways can significantly improve the quality and richness of ESG Reporting, can guide operating and value chain improvements and can enhance marketing efforts. In all cases, DPP provide greater transparency for the company and its customers.

The positive impacts on the external environment may not accrue to the company but will help to mitigate climate change.

Conclusion

The reporting of corporate sustainability is at a regulatory tipping point in Europe. A series of regulations under the EU’s Green Deal have clarified what kind of information must be disclosed by large companies and should be disclosed by smaller companies.

Some of those regulations are being amended in 2025, but the direction of travel has not changed. Accordingly, companies operating in the EU must prepare for greater transparency and build internal systems to support their claims.

Within that ESG Reporting landscape, product-level data held in Digital Product Passports (DPP) will also be required. Product-level data will not only bring new levels of transparency for customers – it’ll also enable sustainability-focused decisions to be made by companies seeking to eliminate waste and pollution.