Digital Product Passports Enable a New Business Logic – Are You Ready for the Next Requirement?
2025.06.23
Gustav Roth is studying Digital Creative at Hyper Island in Stockholm and completed his internship at Axfoundation in the spring of 2025.
Insights from Gustav Roth: “10 kg of car cleaning rags for 229 SEK.” That sentence popped up in my feed the other day, courtesy of a discount retail chain. The image showed a bundle of old T-shirts, cut into pieces and pressed into a package to be sold as disposable cloths. It didn’t spark a desire to buy – it sparked questions. About how we perceive value. About materials. And about the future. Questions that are becoming increasingly relevant as digital product passports are introduced as a tool.
A Symbol of an Outdated System
We’re in the midst of a policy and market shift – where a bundle of rags can represent something far bigger. Where linear business models – fast and cheap – are facing growing pressure from both consumers and legislators to change course. Circularity is a buzzword, often used but rarely realized. And a garment still tends to get just one life – before literally ending up as a rag.
If old T-shirts are worth so little they’re sold as rags – how can we build business models where garments get multiple lives? This is where digital product passports (DPPs) open the door to a new future. Not just in how we produce clothing – but in how we design, manage, and communicate its value.
Digital Product Passports – A Paradigm Shift Across the Value Chain
In less than two years, the EU will introduce mandatory digital product passports – a tool that will enforce traceability throughout the value chain (ESPR). Starting January 1, 2025, legislation will also require textile waste to be sorted and recycled separately. These are critical steps – but far from enough. Recycling should always be the last resort, when everything else has failed. It’s technically challenging and resource-intensive. The fashion industry is just the beginning – digital product passports are likely only the bridge toward a much larger transition.
For producers, this means a sweater is no longer just a product – it becomes an information carrier. It can show where the fibers were grown, how they were dyed, what materials are included – and what happens after its last use. This is not an add-on. It’s a new foundation for how business will need to operate within the EU. Design, procurement, repair, circularity, profitability – what changes when transparency goes from a competitive advantage to a basic requirement?
Digital product passports aim to increase transparency and support the circular economy; their implementation is taking place within the EU’s new ecodesign legislation.
While the potential of DPPs is significant, they also bring practical challenges. For a small clothing brand with just three employees, in-house production, and a strong sustainability drive, the digital traceability requirements can feel more like a burden than an opportunity. Margins are tight, the tech is new, and energy is limited. Yet it’s often these small players who lead the way – experimenting with leftover materials, local collaborations, or real transparency. Should they have to pay more than the large ones just to show responsibility? There’s a real risk here: that systems created for sustainability might end up filtering out those who can’t afford to play by the new rules.
So the question isn’t just how the system works – but who it works for.
A Shift in Business – From Sales to Lifecycle Value
Designing for quality, reparability, and traceability is no longer a “nice to have” – it’s a business-critical necessity. At the same time, we’re seeing a new generation of consumers emerge. For them, sustainability, authenticity, and functionality are hygiene factors.
Sure – according to Svensk Handel, secondhand sales dipped temporarily this year. But the long-term trend is clear: more people are shopping secondhand. It’s gone from being an alternative to a conscious first choice. It’s smart, affordable, and often more desirable than new. To keep this positive trend going, reforms like reduced VAT on reuse are essential.
We’re also getting more data on what happens to textiles that don’t stay in circulation – but the picture is still incomplete. Garments exported abroad sometimes end up in informal dumpsites, as shown in IVL’s recent report. But how common this is remains unclear. The lack of traceability makes it difficult to follow material flows – which highlights the need for better systems. If we don’t act now, garments will continue to end up in landfills – not because they’re worn out, but because of systemic failure.
When products circulate, value is created – for business, planet, and customer.
When Garments Get Multiple Lives – Business Grows
Here lies the opportunity: to make the hidden value of what already exists visible. What if your closet worked like a portfolio – where each garment’s resale value was as visible as a stock price? That would change not just how we consume – but how we build business.
We’ve seen it before in other industries. The music industry shifted from physical products to digital services (Spotify streaming) – with royalty systems that benefit many stakeholders. The textile industry is facing its equivalent transformation. Clothes are physical – but technologies like QR codes, AI scanning, and digital labeling unlock traceability, value preservation, and shared ownership.
Streaming is built on a principle: value lies not in ownership – but in access, transparency, and accountability. The same logic can apply to secondhand fashion. In a model where value is shared across multiple lifecycles, both the producer and the user win – the former by building long-term value, the latter by consuming smarter. And there’s a clear customer incentive when reselling a garment becomes easy and profitable. With DPPs and smart platforms, resale can happen with minimal friction – and every new life a garment gains creates value: for the maker, the repairer, the reuser – and the next wearer. With the right structures, more people could win – financially and sustainably.
Lock in the Material – Not the Potential
Take the deposit bottle. That fixed cap isn’t just about the environment – it’s about control. If the material leaves the system, so does the value. The same logic must scale to fashion. Here, digital product passports create a new opportunity: to design business models that keep materials in the loop, rather than lose them after first use. With DPPs, we can lock in both material and value.
This might just be the start of a mindset shift toward the early phase of the LCA model – upstream, long before a product reaches the consumer. If we want to reduce dependence on virgin resources, we’ll likely need a system where material flows are not only traceable and measurable, but able to circulate for longer – and return meaningfully. Most importantly – it has to be profitable.
From Pilot to Proof – How ReValue Shows the Way
The idea of profitable circularity via DPPs is no longer just a vision – we’re testing it in practice. At Axfoundation, we’re leading the ReValue project together with GS1, Filippa K, and Accenture. We’re exploring how digital product passports can enable entirely new business models in fashion – where garments get multiple lives, and value is shared across the entire lifecycle.
Choosing a System That Lasts
10 kilos of cleaning rags isn’t about old T-shirts. It’s about everything we’ve invested time, money, and expectations in – that deserves the chance to last longer. Because quality isn’t just in the material – it’s in the thought behind it, the ability to repair, reuse, and pass on. We’ve gotten used to fast, cheap, replaceable fashion – but what we need next is something else. Something that lasts. Digital product passports won’t fix everything – but they can be the bridge between bad habits and new business logic. A way to see, preserve, and build value – for real.
Construction, furniture, industry – other sectors are likely next as traceability demands, and circular business models move beyond textiles. And no, you can’t carry a house wall to your nearest reuse store. But you can start with what you’re wearing.
