Why is digital product identification critical to tomorrow’s circular industries?

January, 2024

Why is digital product identification critical to tomorrow’s circular industries?

Are you really going to be net zero by 2030? It is the responsibility of business leaders to reduce their carbon footprint and enable the entire supply chain to be more sustainable. As a result, many have set their sights on circularity, envisioning a future where renewable raw materials feed the production cycle, waste is eradicated and their entire operation is carbon neutral. 

Digital Product Identification: key enablers for circular transformation

Yet, as leaders embark on this transformative path, a common stumbling block emerges: the lack of data and transparency. How can they plan for progress without the ability to accurately measure the challenge, without visibility on the current situation, and without credible data for reporting? In this article we’ll look at how digital identification technologies can provide leaders with critical information they need. 

The good news is that we’re already surrounded by them in everyday life - think of the tags on new fashion garments or the parcel scanned at your doorstep. But how are companies applying these technologies across supply chains to reveal the data needed for fact-based decision making?

“Unique digital identities are a key technology that can help to decarbonize industry value chains. They enable the monitoring of environmental performance through a product’s life cycle, keeping items in circularity longer and reducing waste.” — Tyler Chaffo, Sustainable Technologies Strategy Manager, Accenture.

What do leaders need to know about their business?

1. Quantifying the current situation 
Management needs a meticulous overview from raw material to end of life. At the start of the product life cycle this must include a review of resource consumption and waste and emissions during production. In the distribution phase, this should include carbon emissions tied to transportation and during a product’s active life any relevant energy use, emissions reduction or other environmental information. Many industries still operate on the linear model and are in the dark on their products’ end-of-life phase. Leaders need to measure the proportion of recycling or repurposing practices.

2. Instant visibility and transparency 
Companies need an uninterrupted view of their active environmental performance. Live, real-time data helps ensure they are instantly alerted to any deviations from set environmental standards or unexpected consumption patterns. AI-driven analytics can complement this by continuously interpreting the incoming data, keeping firms informed of their current environmental performance - a real-time feedback loop for leadership to make timely adjustments.

“Our ambition is to enable companies to advance their transition to a circular economy using digital product identification technologies.” — Femke Zijlstra, Sustainability Manager, Avery Dennison Smartrac.

3. Credible reporting 
Leaders need robust and verifiable data for Environmental Social Governance (ESG) reporting. This not only enables corporate transparency, it solidifies stakeholder trust, ensuring that sustainability reports aren't just numbers on a page, but a credible testament to a company's vision and reputation.

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