An Integrated Business Strategy for the Twin Transition: Leveraging Digital Product Passports and Circular Economy Models

Abstract

Companies face significant challenges in implementing digital transformation, often because of the use of fragmented strategies and limited cross‐functional coordination. Furthermore, not all digital innovations align with sustainability objectives. In response to this complexity, recent European Union directives have introduced digital product passports (DPPs) as strategic instruments to bridge the gap between digitalization and sustainability. Although promising, DPP implementation remains in its infancy and requires robust data governance to mitigate the risk of information overload. The present study integrates business perspectives into the design of DPPs, with a particular focus on the textile industry. It explores how DPPs can enhance competitiveness, facilitate sustainability monitoring, and promote circularity. Drawing on insights from textile firms and consulting support, this research employs multicriteria decision‐making methodologies—specifically, the analytic hierarchy process (AHP) and the technique for order of preference by similarity to ideal solution (TOPSIS). The findings reveal a strong alignment between these methodologies and a shared recognition of the strategic value of DPPs, particularly in facilitating access to information on product reuse, repair, and recycling. Additionally, the analysis highlights consultants' emphasis on the “Made in Italy” designation as a key differentiator. Overall, DPPs are shown to advance the development of circular business models in the textile sector by supporting three strategic priorities: material traceability, repair guidance, and optimized recycling pathways.