How ingredient and supply chain transparency can become a competitive advantage

Last week I highlighted the importance of ingredient transparency for a circular economy at the Verband der Chemische Industrie e.V. (VCI) in Frankfurt. Without ingredient transparency repair, refurbishment, remanufacturing and recycling are more difficult and costly. I believe that the chemical industry’s ability to offer its customers data for ingredient transparency and traceability will become a key differentiator.

With the Ecodesign for Sustainable Products Regulation (ESPR) on its way, the Digital Product Passport (DPP), that will be part of the ESPR, is quickly becoming a subject of discussion within the chemical industry. An industry often at the very beginning of the supply chain.

What many people do not realize is that the DPP will be the full responsibility of the OEM, and not of the companies in its supply chain. This means that increasingly, more OEMs will start to ask for ingredient, production and supply chain data of the materials and components they purchase. And they’ll prefer to get such data in an automated, structured and interoperable way, so that it can be easily integrated into their Product Passports, that will be mandatory as of 2027.

Currently, the Number One hurdle is the lack of a standardized global language (an Esperanto of the materials industry) for the exchange of data on materials and ingredients. There are so-called CAS numbers for monomers and polymers, but many materials do not have a CAS number and registration systems are not globally harmonized. Without a standardized language, the DPPs will be of limited value and the risk of greenwashing and misleading use towards labels and consumer communication will increase.

Hurdle Number Two is the lack and consistency of data in the supply chain. At Niaga® we test selected materials in a lab before use by the OEMs and it often turns out that the Material Safety Data Sheet is incomplete, incorrect or too high-level, and with crucial details needed for high level recycling missing. This means that even when the manufacturer of a product wants to be fully transparent, this is not possible without extensive and costly testing by the OEM.

What is needed is a situation - or infrastructure - in which the gathering and sharing of information starts at the very beginning of the chain: at the raw materials level. Data collection should then continue through the whole value chain while protecting IP sensitive information at the same time. This will require years rather than months to put into place and fill with data. Unfortunately, as yet, the language, systems, business case and urgency are missing.

My modest advice to the leaders of the chemical industry was twofold:

1. Even though there is no legal requirement or direct reason to start building what is needed to systematically collect and store ingredient data, start building today! Especially for recyclable materials.
2. Start somewhere. Start small. Learn and expand. And regard it as a strategic activity to make you ready for the future, as soon as it is there.