The adoption of the European Green Deal marks a turning point in the shaping of our economic future. Through new standards for sustainability, green logistics and environmentally friendly business, Europe is to become the first climate-neutral continent by 2050 and decouple its growth from the use of resources. As part of this transformation strategy, existing laws are constantly being adapted or redrafted – with serious implications for global supply chains. We explain what companies can expect and what role digitalization will play in this context.
The European Green Deal – new laws and regulations
The European Green Deal aims to reduce the environmental impact of production and consumption. This includes stricter emission limits, requirements for the circular economy and increasing standards for product life cycles.
The basic cornerstones of the agreement are:
- a green industry,
- energy- and resource-efficient construction and production,
- sustainable and intelligent mobility,
- clean and safe energy,
- EU climate protection targets for 2030 and 2050,
- the protection of ecosystems and biodiversity
- and a pollutant-free environment.
The implementation of the European Green Deal may require investments in more sustainable materials, more efficient production processes or innovative recycling technologies. To drive the transition to a sustainable economy, there are numerous regulatory measures, rules and legislative initiatives covering various sectors of the economy, including energy, transportation, agriculture, buildings and industry.
An overview of regulations and planned measures that correlate with the European Green Deal:
- The European Climate Law was adopted in July 2021 and forms the foundation of European climate policy. It anchors the goal of climate neutrality by 2050 in law and sets out the framework for the steps required to achieve this goal. The objective also includes achieving a 55 percent reduction in greenhouse gas emissions by 2030 compared to 1990.
- The planned EU Supply Chain Law, also EU Corporate Sustainability Due Diligence Directive (CSDDD) is intended to help reduce environmental destruction and human rights violations in the globalized economy.
- The Corporate Sustainability Reporting Directive (CSRD), which has already been adopted, will in future oblige many companies to publish a detailed report on their sustainability efforts, which must be prepared in accordance with binding standards.
- Sustainable Finance aims to create the basis for a sustainable EU-wide financial system.
- The “Fit for 55” package contains a package of 13 legislative proposals to set new targets for renewable energies and energy efficiency and to promote the use of sustainable fuels in transportation. It is intended to set the course for achieving a 55% reduction in greenhouse gases by 2030 compared to 1990 levels.
The European Green Deal is therefore a dynamic package of measures that is continuously adapted, supplemented and further developed – regulations can be changed or added over time.
The Digital Product Passport – a catalyst for improving sustainability standards
Another important component of the European Climate Deal is the planned Digital Product Passport. It intends to improve the sustainability of products and provide companies and consumers with detailed information on production, environmental impact, ingredients, repairability and maintainability as well as recycling and disposal. The passport is therefore an instrument for promoting transparency along the supply chain and serves as a key element in closing the gap between consumers and the origin of the products which they often use on a daily basis.
The Digital Product Passport is intended to create the basis for the efficient use of resources and a strengthened recycling ecosystem. By disclosing the material composition and providing access to information on repair and disposal options, end consumers can actively contribute to an extended product life and a higher circular economy potential. At the same time, recycling companies and manufacturers are supported in identifying secondary raw materials and optimizing recycling processes. This in turn reduces dependence on primary raw materials and contributes to a reduction in CO2 emissions by accelerating the transition to a closed-loop materials economy.
By making all relevant data available in the future, the Digital Product Passport will enable holistic visibility of the environmental impact and social conditions behind every product – which will have a serious impact on companies’ operational business.
Digitalization and transparency to implement the European Green Deal
The objectives of the European Green Deal and the transparency of the Digital Product Passport present companies with new challenges – they must critically scrutinize their suppliers, production methods and material procurement. Supply chains must be reviewed and processes adapted where necessary in order to meet the increasing demands for ethically and ecologically responsible products. Digital technologies play a key role in this context. After all, they provide the necessary infrastructure and data processing capacities to collect and access information about products and individual stages of the supply chain. Innovative solutions such as Blockchain, IoT or Artificial Intelligence are not only crucial for ensuring the security, transparency and trustworthiness of the data contained in the Digital Product Passport – they also make it easier for companies to operate more sustainably in other areas.
Collaborative platforms and standards for data exchange are fundamental to promoting interoperability along the supply chain. Smart tools facilitate the standardized collection, processing and provision of data and thus support many sustainability initiatives under the umbrella of the European Green Deal. By implementing standardized data formats and open interfaces, relevant information can be shared seamlessly between manufacturers, suppliers, companies and customers, thus creating a collaborative and transparent environment.
Well-networked and transparent companies have a clear advantage when it comes to meeting the existing and future requirements of a climate-neutral and sustainable economy. The business community is increasingly recognizing this fact, as the results of the 19th Hermes Barometer on transparency within the supply chain show: More than two thirds of the logistics managers surveyed (68 percent) agree that the information requirements for their own supply chain have increased significantly in light of the new legal guidelines. In addition, more than half of the survey participants attach importance to data collection and analysis in order to comply with the legally required environmental and social standards.
Conclusion: European Green Deal – a new chapter for sustainable supply chains
In order to achieve the ambitious goal of climate neutrality by 2050, the European Green Deal requires a far-reaching transformation of all economic sectors. The digitization of supply chains in particular plays a decisive role in this context. The success of the Euopean Green Deal is closely linked to the ability to optimize supply chains through digital solutions and thus make them more transparent.
The introduction of tools such as the Digital Product Passport underlines the importance of transparency and traceability. After all, it is not just the regulatory authorities and the market that are calling for transparency – consumers are also placing increasing value on ethical and environmentally friendly products. The need to make global supply chains more sustainable is becoming not only an environmental priority, but also an economic and social one. Further digitization is therefore not just a tool for increasing efficiency, but an essential building block on the way to a sustainable, inclusive and competitive future.