The EU Battery Regulation (2023/1542) outlines a comprehensive framework for regulating the entire battery lifecycle, from raw material extraction to recycling. It supports the EU's internal market, promotes a circular economy, and considers environmental and social impacts at all stages. The legislation requires firms to conduct due diligence, which includes implementing procedures to manage risks connected to human rights, as well as social and environmental concerns. It supports rules, such as the EU Conflict Minerals Regulation, Corporate Sustainability Due Diligence Directive (CSDDD), and Germany's Supply Chain Due Diligence Act (LkSG), all of which align with the broader EU sustainability aims of the Green Deal. Together, these laws ensure that businesses address important risks in their supply chains, thus supporting a more sustainable future for battery production and use.
Due Diligence Requirements
Starting in August 2025, the legislation requires large economic operators with a turnover of more than €40 million to execute thorough due diligence steps across their battery supply chains. By February 2025, the European Commission will have published its due diligence rules. The legislation applies to all batteries and raw materials, and it requires economic operators, with the exception of small and medium-sized firms (SMEs), to undertake certain due diligence responsibilities when placing batteries on the EU market or putting them in service.
The obligations for companies include:
Management system for responsible sourcing
Companies must implement a due diligence policy that complies with international standards, such as the OECD Guidelines for Multinational Enterprises. The policy must cover environmental and social concerns throughout the battery supply chain, with a particular emphasis on human rights, labour rights, and environmental impact. This includes creating transparency and traceability systems, as well as establishing a chain of custody for raw materials.
Risk assessment and mitigation
Identifying and assessing risks from social and environmental factors is crucial. Companies must create risk management plans that contain methods to prevent, reduce, or redress adverse impacts on the environment and human rights.
Grievance mechanism
Companies must include grievance processes that allow stakeholders, such as personnel and communities, to report abuses or adverse impacts. This involves engaging with civil society organisations, local government, and affected communities.
Annual Reports and Independent Audits
Economic operators must perform annual reviews of their due diligence methods and report the findings. Furthermore, the legislation requires third-party audits to check the effectiveness of the due diligence methods, assuring compliance with the regulations.
Raw Materials Covered
The regulation focuses on critical elements, like lithium, cobalt, nickel, and natural graphite, which are essential for battery production. These materials are frequently sourced from high-risk areas where mining techniques have been connected to human rights violations and environmental degradation. The regulation aims to promote responsible sourcing by requiring companies to trace the origins of certain resources and analyse the hazards connected with their extraction and processing.
Environmental and Social Risk Categories
The EU Battery Regulation is unique in that it outlines both social and environmental risk categories, encompassing a wide array of issues, including:
Environmental risks:
Air, including but not limited to air pollution, including greenhouse gas emissions
Water, including seabed and marine environment and including but not limited to water pollution, water use, water quantities (flooding or draughts), and access to water
Soil, including but not limited to soil pollution, soil erosion, land use and land degradation
Biodiversity, including but not limited to damage to habitats, wildlife, flora, and ecosystems including ecosystem services
Hazardous substances
Noise and vibration
Plant safety
Energy use
Waste and residues
Social risks:
Occupational health and safety
Child labour
Forced labour
Discrimination
Trade union freedoms
Community life, including that of Indigenous peoples
Internationally recognised due diligence instruments
Compliance and Consequences for Non-Compliance
Member states will establish market surveillance authorities to monitor compliance. If companies fail to meet due diligence requirements, they may face restrictions or prohibitions on selling batteries in the EU market, and in severe cases, products could be withdrawn. Additionally, companies will have a period to rectify non-compliance before more stringent actions are taken.
How Companies Can Prepare
To comply with the EU Battery Regulation, companies should take proactive steps, including:
Implementing strong management systems: Companies must establish extensive due diligence management systems to monitor and report on their entire supply chain.
Collaboration with suppliers: This is critical for ensuring transparency and mitigating risks. To strengthen supply chain standards, companies should consider procuring from certified mines inspected by the Initiative for Responsible Mining Assurance (IRMA) and supporting collective corporate action.
Using traceability systems: Companies should implement traceability systems, such as the Global Battery Alliance's Battery Passport, that track battery components from their origin to the finished product. This solution not only meets EU criteria but also promotes transparency.
Third-party audits: Hiring independent auditors to review and verify compliance with due diligence criteria is critical. This builds credibility and ensures that due diligence measures are continuously improved.
The EU Battery Regulation is a game-changer for the battery industry, setting new benchmarks for sustainability, transparency, and ethical sourcing. While compliance may be challenging, companies that invest in robust due diligence systems, collaborate with stakeholders, and prioritize sustainable practices will not only meet regulatory requirements but also position themselves as leaders in the transition to a greener economy.
At Battery Associates (B.A), we offer comprehensive compliance solutions for European battery regulations, guiding you through the industry's evolving landscape. Our expert team offers tailored solutions and insights to navigate these requirements seamlessly. Reach out to us for detailed support and information on meeting compliance standards.
About the Author
Junior Analyst - Battery Associates
Gokul is currently a Junior Analyst at Battery Associates. He holds a master's degree in energy engineering from Politecnico di Milano and a bachelor's degree in mechanical engineering. His expertise lies in power generation, renewable energy, and energy storage. Gokul is passionate about battery technology and its ability to fulfill the changing needs of the energy sector. He is particularly interested in battery energy storage systems (BESS) , Electric vehicles (EV) , and promoting a circular economy throughout the battery value chain.
Comments