Circular economy and traceability: how the DPP enables new business models

There is a lot of talk about circular economy, but its real bottleneck is rarely named: the lack of reliable information about products. Without knowing what something is made of, where it has been and what state it is in, you cannot repair, resell or recycle it efficiently. That is where the Digital Product Passport changes the game: it turns traceability into the enabler of new business models.

Circular economy, in one sentence

The circular economy aims to keep products and materials in use for as long as possible and at the highest possible value — repairing, reusing, reselling and recycling instead of discarding. It is a shift from a linear model (take, make, dispose) to a regenerative one.

Why traceability is the bottleneck

Every circular strategy depends on data: to resell you must prove authenticity and condition; to repair, know composition and disassembly; to recycle, know materials and substances. When that data does not exist or is not trustworthy, circularity stalls. The research confirms it: Jensen and colleagues (2023) show that lifecycle decisions depend directly on which data are captured and how accessible they are across the chain.

How the DPP solves the problem

A well-built DPP attaches to each product a governed data record —identity, composition, lifecycle events— on open standards. Back in 2021, Adisorn, Tholen and Götz argued that a properly designed DPP can contribute decisively to the circular economy, and Walden and colleagues described it that same year as a key enabler of circularity. The point they stress is that design matters: a poorly planned passport does not deliver that potential.

Business models the DPP enables

• Verified resale: second-hand with provable authenticity and lineage — more resale value, less fraud.
• Buy-back and take-back: recovering the product at end of use because you know exactly what it is and what state it is in.
• Product-as-a-service: renting or subscribing instead of selling, with asset tracking across its life.
• Re-certification with lineage: refurbish and put back on the market with a verifiable history.

Langley and colleagues (2023) propose guiding principles for orchestrating exactly this kind of smart circular economy around the DPP: coordination between actors, not technology in isolation, is what unlocks the value.

From data to competitive advantage

Treated as a burden, the DPP is a compliance cost. Treated as data infrastructure, it is the foundation on which circular revenue is built. That is the thesis of our own peer-reviewed research: the DPP’s circular potential is realised when governed data is combined with analytics and a firm’s dynamic capabilities (see Research).

Frequently asked questions

Is the circular economy only for large companies?

No. Workshops and SMEs can capture circular value —resale, repair, buy-back— often with more agility. The DPP lowers the barrier by standardising the data.

Do I need a DPP to do circular economy?

You can start without it, but scaling resale, repair or buy-back without reliable data is costly and fragile. The DPP is the foundation that makes it systematic.

Where do I start?

With the identity and events of one product line. Our guide on how to implement a DPP details the steps.

References

• Adisorn, T., Tholen, L., & Götz, T. (2021). Towards a digital product passport fit for contributing to a circular economy. Energies, 14(8), 2289. https://doi.org/10.3390/en14082289
• Walden, J., Steinbrecher, A., & Marinkovic, M. (2021). Digital Product Passports as Enabler of the Circular Economy. Chemie Ingenieur Technik, 93(11), 1717–1727. https://doi.org/10.1002/cite.202100121
• Langley, D. J., Rosco, E., Angelopoulos, M., Kamminga, O., & Hooijer, C. (2023). Orchestrating a smart circular economy: Guiding principles for digital product passports. Journal of Business Research, 169, 114259. https://doi.org/10.1016/j.jbusres.2023.114259

Related reading: What is a DPP? · How to implement a DPP · Research