As the EU prepares to introduce regulation which will require products exported into the EU to have a Digital Product Passport, GS1 UK warns that many UK businesses are not prepared, which could cost them an average of £1.5 million per year in revenue from lost trade with the EU, which remains the UK’s biggest bilateral trading bloc even after Brexit.¹

The Digital Product Passport, or DPP, which is set to be first introduced in 2027, is a new regulation from the EU which will require brands and retailers to provide detailed information on products entering the EU, in an effort to achieve the EU’s long-term ambition to reach net zero. This includes data on a product’s origin, materials, environmental impact, and supply chain journey, with the aim of boosting transparency, circularity, and sustainability. Sectors such as textiles, construction, electronics, and batteries will be among the first to be affected, with other industries to follow by 2030.

However, according to new research from GS1 UK, many businesses in the UK remain unprepared: only 16 percent of managers or higher surveyed* at businesses who trade with the EU believe they are fully prepared for DPP, and 79 per cent say they are concerned that they could be prevented from trading with the EU from failing to comply with the regulation.²

This could have disastrous consequences for UK businesses. Based on the mean average value of goods exports to the EU per business, GS1 UK estimates that exporters who fail to meet DPP requirements could risk losing approximately £1.5 million in annual revenue, as failing to comply could result in products being turned away at the border. According to those surveyed, this could be 45 per cent of their total annual revenue, with a third (31 percent) of businesses saying they would not survive if they were no longer able to trade with the EU.

For the textiles, construction and electronics industries – the first industries affected – the regulation represents a significant challenge, as the research found that almost one in five businesses across these sectors (17 percent) are not confident they know what the DPP will require.³ This challenge is particularly acute for the textiles industry, which has faced a difficult five years since Brexit, as UK textile exports to the EU fell by 63 per cent between 2019 and 2023.⁴

UK businesses are facing multiple barriers to becoming DPP compliant, with the most common barrier being ensuring that their data is standardised and shareable (36%). Also high on the agenda for businesses are the high implementation costs (31%) and the technical complexity (28%) in implementing DPP across their products.

Additionally, the DPP will require product information to be displayed at the border, via a 2D carrier, otherwise products will be blocked from entry. Smart QR codes, such as those powered by GS1, are favoured among the optimal solutions, with 29 percent of brands saying they are already using this to share product information, and 53 per cent saying they would definitely consider using this technology.

While European businesses have received EU funding, UK businesses have not received any such grants or funding from the government specifically for DPP compliance – yet another challenge for UK businesses to contend with as the research found that 46 per cent say they are now falling behind their European competitors.⁵

Despite the challenges in becoming DPP compliant, businesses are overwhelmingly supportive of the scheme, with 89 per cent believing that the scheme will be successful in its goal to support the EU’s sustainability targets.

Businesses also see further benefits in providing key product information via a DPP. This includes: enhanced brand reputation and sustainability credentials (37%); increased potential for circular business models (34%); and streamlined compliance with other regulations (30%) – such as the Corporate Sustainability Reporting Directive and Ecodesign for Sustainable Products Regulation.

And with GS1 UK’s ‘A New Era of Transparency Report’ finding that 89% of retail executives agree consumers are less loyal to brands than they were 10 years ago, the DPP could help to rebuild trust between business and consumers.

In fact, there is a strong desire for DPP amongst consumers – 70% say that it should be a legal requirement for brands and retailers to report on and provide access to sustainability data.⁶ 59% t said this would increase their trust in a brand⁷ – while 68% said they were concerned about greenwashing, which would be eliminated by the DPP’s requirement to report on sustainability data.⁸

Anne Godfrey, CEO of GS1 UK, commented: “The Digital Product Passport is not a distant regulatory concept, it’s a fast-approaching reality that could fundamentally reshape trade with the EU. The clock is ticking, businesses need to get their data in order, or risk being locked out of a £300 billion export market.  While GS1 UK can provide the technology and standards needed to comply, including smart QR codes that can host Digital Product Passports, more urgent action is needed. Businesses must act now to prepare – we’ve a dedicated team who can help businesses to access the next-generation QR codes needed to implement the standards that’ll facilitate DPP compliance. There is also a need for swift practical support and guidance by the government to minimise the risk of economic damage of non-compliance.”

To avoid being shut out of EU markets, GS1 UK is calling on both businesses and policymakers to take immediate steps: businesses must act now to standardise their product data, while the government must step up with practical support to close the readiness gap.

Original article and references GS1 UK