Louise McGrath

Welcome back to DBrief, the podcast where we explain policy to industry and industry to policymakers. I'm Louise McGrath, Head of Industry Development and Policy at the Australian Industry Group, and I'm joined today by Brett Hyland, Stakeholder Engagement Manager at the National Association of Testing Authorities.

Welcome, Brett.

Most Australians have never heard of NATA, yet they rely on it every day. What's a typical day where people are unknowingly depending on NATA accredited organisations?

Brett Hyland

Well, folks might not always know that their city water supply is subject to accredited testing that ensures safety from contaminants and pathogens. accredited environmental tests monitor our air quality and they surveil industrial pollutant output.

If your doctor's sending you for a blood test, this is all covered by accredited testing. the electrical appliances that you use at home, the building products in your house, the furniture you sit on, the road that you drove on to get to work, any safety equipment that you're using in your workplace, even the milk in your morning coffee would have been subject to surveillance testing at an accredited dairy laboratory.

So, I think I would agree that a lot of this probably does go on without people realizing.

Louise McGrath

I remember attending your awards night a couple of years ago and I was astounded at all the different testing laboratories that are captured under your umbrella.

Brett Hyland

Were you there? Okay, right so.

Louise McGrath

Yeah, that that was good. But as you say, accreditation does underpin a lot of you know day to day life. But how does it work in a global network?

So if a laboratory in Melbourne tests a product and a laboratory in Germany tests the same product, how does the world know that these results can be trusted equally?

Brett Hyland

So in my experience there is quite good comparability between the accreditation infrastructure that exists in different countries and I can tell you how it works. there is a there is a global recognition arrangement, of which NATO is a signatory body, and to achieve and to maintain signatory status in this arrangement, there's actually quite an exacting audit process by peer evaluators from other ABs around the world, accreditation bodies, sorry, around the world.

So, these audits are pretty intense. So they can last a week or more with a team of perhaps half a dozen auditors. so it you know it's a fairly serious it's a fairly serious event. Now NATA itself contributes peer evaluators into this global system and I happen to be one of these peer evaluators. So we get to see first hand how the overseas bodies operate.

So in my personal experience and the experience of my colleagues who do similar things, I would say that there is good comparability in the rigour of the processes that are applied. Now you asked specifically about Germany. they have a national accreditation body, that's D U X, DUX. And so as if I speak personally, I would have high confidence in a test report that came from a DUX accredited laboratory.

Louise McGrath

NATA is also part of the Technical Infrastructure Alliance, alongside organisations such as Standards Australia and the National Measurement Institute. So what role does NATA play in that e ecosystem? And why should industry care about the connections between standards, measurement and accreditation?

Brett Hyland

Well they're certainly interlinked. So NATO's main accreditation activity is testing, but you cannot have reliable testing in the first place in the absence of robust documented standards and reliable measurement standards on which the testing is based. So our National Standards Association, Standards Australia, and the global arrangements that they feed into at the ISO level and the IEC level, and the accredited bodies, the accredited standard development organizations that hang off that system, these are responsible for most of the standards that we that we end up using.

In a similar way, Australia's National Measurement Institute also forms part of a global network of trusted overseas national measurement institutes. They produce the reference standards that we rely on for things like mass and time and force and what have you and similar to NATO, these NMIs are subject to similar exacting audits by overseas evaluators to ensure that there's equivalence across international borders. So it all represents part of a wider trust network.

Louise McGrath

Often politicians and also Australian industry group, we talk about a global rules-based order. And often that seems very opaque. But this is really what we're talking about. It's when these national standards and accreditation organizations, measurements organizations, work together to provide that global trust and that global connectivity. But we are operating in an increasingly global. What have I just say there? But we are operating in an increasingly

increasingly global supply chains. Do different languages, cultures or regulatory systems, and also interpretations of standards create challenges for those international laboratories, or is the technical infrastructure robust enough to overcome those differences?

Brett Hyland

I think largely it is robust enough, but you're right to point to these things as potential sources of ambiguity and maybe conflict, but I I wouldn't want to overplay that. in my experience, of all the things that you mentioned, perhaps the one that stands out for me is where let's say domestic standards are written with certain implicit assumptions that are not necessarily the same assumptions that an overseas engineer might apply. So I did I did once visit an overseas laboratory many years ago when they were testing to an Australian standard which called for stress testing of a product, followed by leakage testing. And we were quite surprised as we watched the test that after the stress test they actually discarded the sample and used a brand new sample for the leak test, which is not the way that the test would be carried out in Australia. and so, of course, there would be differences in the result achieved, but when took the trouble to study the text of the standard. We had to admit that the interpretation that we just witnessed was truly a valid reading of the text as written. It just hadn't been written in a way that captured the intent, I think, of the of the standards writers.

But again, I think this is not a typical situation and that by and large, laboratories around the world do converge on consistent implementations.

Louise McGrath

Well, think often in international trade we all use the same words, but rarely mean the same thing. So it's as you say, context always really helps. But with all these systems and structures in place, why do we still hear about product failures? And are there perhaps other systemic problems with international supply chains?

Brett Hyland

Well, that is a great question, and I would say that you're getting to the real nub of the issue here. and it it's actually something that has set my own career on a on an unusual tr trajectory. so firstly, a lot of products come into Australia that were never subjected to any formal testing or certification in the first place. And maybe that's fair enough. Not everything is high risk, of course. and then there are market access rules where various non-equivalent options are permitted. And so even our own building code is an example of that where different evidence of suitability pathways are provided for, but which might not always lead to equivalent levels of confidence. And then we come to fake test reports and certificates, and I've seen plenty of those in my time.

How often are they validated in a supply chain? Well, not often enough, I would say, and I can understand that because it's not it's not always straightforward to validate a certificate that has come from overseas. And yet I don't think even that is the worst of it. What worries me much more and what I think is far more prevalent are cases where a genuine certificate is presented for a product that wasn't the subject of the certificate. So this this can take many forms. So for example, a product pr a product certificate might be presented for a product whose design has changed, you know, all the materials from which it is constructed have changed. Or even worse, a product that has nothing to do with the product that was actually certificated. Or maybe a combination where s some legitimate product and dodgy product all gets mixed up together in the supply chain and no one can tell the difference anymore.

So these problems, these longstanding problems have generally been regarded and certainly were regarded by me as intractable but finally there's some hope on the horizon for finally solving these types of supply chain failures.

Louise McGrath

Well, I think what you're going to be talking about is a digital product passport, so we might take a break here and come back and get into the details.

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Louise McGrath

And welcome back to DBrief, where I'm speaking with Brett Hyland, stakeholder engagement manager at the National Association of Testing Authorities.

And Brett, I know you're very passionate about digital product passports. Why are they emerging now? What's changed in global trade, regulation and customer expectations that means they're becoming necessary rather than optional?

Brett Hyland

Yeah, so things have changed, but maybe I should I should start by saying what a digital product passport is. It's a structured set of data about a product that can be accessed via a data carrier, like a QR code that is located on the product. So that's what a product passport is. As to why, why now? quite simply the product passport concept arose to counter false product claims.

And it's exactly the lack of trust in international supply chains that I that I talked about a moment ago. Now, in the case of digital product passports though, interestingly enough, the concept arose not in relation to performance, false performance claims, but in the context of false claims about sustainability. And you may have you may have heard the term greenwashing, which is a big part of this story. So sustainability claims historically have been notoriously unreliable.

In part, I'm sure because the formal accreditation structures have been slow to be adopted in in that space. so it it's had a bit of a wild west feel about it. but the other huge shift affecting this space are the mandatory corporate reporting laws where companies have to now report their sustainability performance and they are looking for reliable data, otherwise the corporate regulator might come knocking on their doors and so product Passports can help with this as well. But anyway, product passports of one form or another are starting to spring up all around the world. But by far the best known example is the EU product passport, even though it's not yet in force.

So this so the EU product passport stems from their regulation called the Eco Design for Sustainable Product Regulations 2024, and it will require product passports for certain product categories imported to Europe by certain dates. And storage batteries are the first specified product and the mandated effective date there is February twenty seven. But as the name would suggest, Eco Design for Sustainable Products, this is all about sustainability claims on products.

But in a sign that Australian exporters must take note of other EU regulations are beginning to come into force that mandate product passports for attributes that have nothing to do with sustainability. And other countries are ready to follow suit. So one example to watch closely would be the EU construction products regulation, which is expected to soon require product passports for product performance.

Louise McGrath

Well, I think one of the growing challenges for industry at the moment is consumer trust. And I think trust is breaking down. As you know, there's all there's a lot of fake AI and all sorts of things out there. So I can really see the need for it, especially as you say, increasing requirements for claims on climate and sustainability, modern slavery, all sorts of things. But at a practical level. How does a product passport work? What data follows a product? Who contributes to it and who verifies it's accurate?

Brett Hyland

Yeah, so to understand product passports you we first have to break the mindset that that DPPs are a European thing. So yes, the European product passport was the one that that first created the name of the concept, but it is a broader concept. now in particular, I can point out that the EU system is a regulated system. So y if you make a false claim in a passport, in an EU passport.

And then the market surveillance system catches you, then you're in big trouble. in that in that sense, regulator systems don't have to rely so much on evidence of compliance, they can rely on just the threat of penalties. But you know, but there's a there's a known flaw in this approach, which is that the degree of reliability of the upstream supply chain data on which the DPP issuer is relying on may be questionable.

So if we think about sustainability data, for example, claims are often a result of attributes that actually accumulate along a supply chain. So there is an evolving view that upstream suppliers should also be issuing DPPs, sorry, digital product passports to the downstream suppliers so that that data can become verifiable each step.

Now clearly we're a long way from seeing that widely rolled out yet, but it's a vision to keep in mind. But anyway, to come back to your original question. The supplier must have a way of uniquely identifying their product, whether that's at the level of a batch or model type or even an individual serial number, and then they must link that identity to a passport which is hosted in a file that contains the set of information about the product but that's about as far as we can speak in general generalities because the implementation is going to depend upon the specific rules. So is it European product passport rule set that needs to be met, or a Chinese product passport rule set, or some other country's rule set? And so that's why there's such a flurry of international activity right now on defining universal rules for product passports that can serve as a I guess a consistent basis that countries might add to, but at least there's a you know there's a common framework underneath it all. So as to the verification component, well this is ultimately designed to serve the buyer of the product. so you know the buyer must decide whether they believe the information that's contained, perhaps in a regulated system. there are reasons to believe that. In a voluntary system, we I might talk about that if we get time later on, but there are ways of providing verification trails even outside of a regulator system. and I guess verification also means that market surveillance authorities come into the mix as well. So it's quite a complex space.

Louise McGrath

It is complex and supply chains are pretty messy. I can see the value though, because if we think about where we want to go with Australia selling mineral inputs, critical minerals into supply chains, and we want to demonstrate that they're produced using green energy and all that sort of thing, then we really do need to have those data supply chains that really support those claims. But what do you think are the biggest barriers facing Australian manufacturers? Is it going to be the technology cost? Is it the data quality? The supplier engagement, or perhaps not knowing where to start?

Brett Hyland

Well, for sure, the biggest barrier is not knowing where to start and the uncertainty of what specific rules need to be met. but it doesn't mean that suppliers should do absolutely nothing. There you know, there are some fundamentals that are not going to change. You do need to digitally identify your product and you need to capture that identity in a data carrier on the product itself. So just thinking about those matters would be you know a step in the right direction.

so things start to diverge then depending on whether the product passport registration is done through an overseas system, which would be the case in the EU, or whether the expectation is for you, the supplier, to host the product passport on your own website. So that that product link, that product QR code leads back to your own data set.

Now both approaches are probably going to be needed to be honest, I think I think both systems are going to going to appear so there is a little bit of a technology hill to climb there as well.

what I might say too is that there is a need to get some international rules put in put in place here because if we can't exporters are going to have a very hard time trying to grapple with you know let's just say dozens of different product passport regimes. and maybe I could just do a little promotion here if I may as to the newly established Standards Australia Committee for Digital Product Passports. and participation in this is invited through any Standards Australia nominating organisation.

And from my point of view, I happen to be the chair of that committee, this this is a way to raise local awareness of these important global developments. It it's a way to add the voice of Australian industry into this standardisation process. And it's a way to facilitate well informed preparation by Australian exporters. So perhaps there may be some people, some listeners that that might see a role for themselves on this committee and we'd encourage you to reach out to Australian standards if you had interest.

Louise McGrath

Good chat up, Brett. And yes, James Thompson, who looks after standards at Australian Industry Group, I know is talking to a couple of members about potentially joining that group. Because, you know, we can complain about just taking regulation and having it imposed on us, or we can step up and actually engage and try to shape that regulation before it hits us. Now, thinking about the future.

Do you think that this is really the beginning of a future where every product carries its own verifiable history?

Brett Hyland

Yes, I do. I do think that is the future. There will always be low risk products that will probably sneak under the threshold of the of the requirement for this this type of this type of system. but for anything that might be vaguely considered a risky product, it is my view that in time verifiable data will need to be produced. So and no none of us know what the future is going to look like but i could point towards some things that that industry might keep an eye on to give them a sense of where things might be moving so one of the obvious things to watch is the is the international committee on digital product passport standardization so that's an ISO IEC committee it's the joint technical committee number five

As I mentioned, it's quite newly established and we have a mirror committee here in Australia, which was what I was talking about a moment ago. So that's going to be something to watch. it will also be worth watching what individual countries do. you know, China springs to mind. You know keep keeping an eye on the national developments in the in the product passport space is going to be, I think, important.

There are some there are some local initiatives as well. there is the Australian Agricultural Trans Traceability Protocol, which is sort of still at still at pilot stage, supported by the Department of Agriculture, Forest and Fisheries here in Australia. So that's an interesting initiative.

So too is a thought piece put out by the Australian Steel Institute, ASI, called Data Driven Connectivity. So that would be a paper that that might be worth downloading from their website to get a sense of how ASI is seeing the role of product passports in industrial supply chains. and the perhaps the final thing I'll suggest as something to watch is the at the UN level the United Nations Transparency Protocol, which is a voluntary whole of supply chain protocol. No there are no platforms involved, it's just a data exchange protocol. And it involves the voluntary issuance of product passports with provision for structured conformity assessment data to be built in to the verification process. And in fact, it is the United Nations Transparency Protocol that forms the basis for the Australian Steel Institute approach in their data-driven connectivity.

So there's some things that that that listeners might like to keep an eye on to get a sense of where this where this is moving.

Louise McGrath

But I think that risk will always be in the eye of the beholder.

So if you've paid a premium for what you think is green steel going into your building, you would want to know that traceability.

But or if you've bought a child's sorry, I'll start this again. But I think risk will always be in the eye of the beholder. So if you've paid a premium for what you think is green steel to go into your building, you will want to have that traceability. Or if you've bought a child, car seat online, you'll want that traceability because you want that safety and that reassurance.

So I think it will have to be a framework that a lot of people can have access to. And as you say, interoperability across the world as we go forward. And thank you very much, Brett, for coming along. It's been very interesting. And I think it's right at the start of a very long conversation. Thanks for listening. And if you have any questions or comments, please email us at industry.policy@australianindustrygroup.com.au.

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I will speak again soon!