What the EU Batteries Regulation Means for Supply Chain Transparency

As an increasing number of global regulations require companies to map and monitor their end-to-end supply chains, supply chain transparency has become the standard not only for compliance but to remain competitive in the market. While industries such as apparel & textiles and food & agriculture have an established precedent of supply chain transparency, other industries such as consumer electronics, automotive, and batteries have just begun to adopt these best practices - motivated in part by strict legislation that will go into effect in the coming years.

The EU Batteries Regulation, which will replace the EU Batteries Directive, covers the entire battery lifecycle - from production to durability and recyclability. Companies will need to collect data related to their upstream supply chain while tracing the full lifecycle of the product. The Regulation covers five categories of batteries:

• Portable batteries

• Electric vehicle (EV) batteries

• Light means of transport (LMT) batteries

• Starting, lighting and ignition (SLI) batteries

• Industrial batteries

The requirements under the EU Batteries Regulation will roll out over the next several years. Beginning in August 2024, all batteries regardless of whether they are used in a product or sold separately need to have undergone a CE conformity assessment and be CE marked. This is a self-certification process for portable and industrial batteries with a capacity of less than 2kWh. For all other batteries, a notified body which will be established once the Regulation is in full effect will conduct relevant assessments and certification.

Depending on the battery category, various requirements must be considered to be compliant. Not every requirement is relevant for each battery category. These requirements include:

• Restriction of substances (Cd/Hg/Pb) in the production of the battery

• Carbon footprint of the battery

• Recycled content in the battery

• Performance and durability of the battery across its product lifecycle

• Safety of stationary energy storage systems

• Relevant labelling and marking

• Information on the state of health and expected lifetime of batteries

Digital battery passports to improve supply chain transparency

Starting in February 2027, the Regulation will introduce requirements for digital battery passports for industrial batteries (with a capacity of more than 2kWh), electric vehicle batteries and LMT batteries, such as those used in e-bikes. The passports will be scannable via QR code, just like the requirements for the EU’s forthcoming Digital Product Passport Directive.

The goal of the passport is to increase supply chain transparency for in-scope batteries. The passport record should include, among other data, general information about the battery such as manufacturer information as well as geographical location of the manufacturing facility, along with the required data points listed above.

Supply chain due diligence for raw materials

The Regulation also establishes supply chain due diligence requirements for companies that first make in-scope batteries available on the EU market if the active material in those batteries contains cobalt, natural graphite, lithium or nickel. The Regulation exempts companies with an annual turnover of less than 40 million EUR and that are not part of a larger conglomerate with a consolidated annual turnover of 40 million EUR.

To meet the supply chain due diligence requirements of the EU Batteries Regulation, companies must do the following:

• Adopt an internal due diligence policy for batteries

• Establish company management systems to support due diligence policies

• Identify and assess material risks in the upstream supply chain

• Design and implement a strategy to respond to and remediate identified risks

The Regulation requires third-party verification of all due diligence policies by a notified body. This set of obligations will enter into force in August 2025.

Battery lifecycle management

Beginning in 2025, the Regulation establishes extended producer responsibility for companies that first make batteries available on the market in an EU member state. In layman’s terms, this means that these companies are responsible for the end-of-life collection and treatment of the batteries in that member state. The EU will release targets for collection rates and recycling efficiencies that companies must adhere to. Beginning in 2027, the Regulation will also introduce targets for material recovery of cobalt, copper, lead, lithium and nickel in battery recycling and treatment facilities. Functionally, this means that the EU Batteries Regulation requires a merging of both upstream and post-consumer product lifecycle. View the full text of the Regulation here.

The EU Batteries Regulation will set a new precedent for supply chain transparency for batteries. With over 15 years of experience mapping upstream supply chain, Sourcemap can help companies meet the supply chain due diligence requirements of the Regulation, including identifying and populating relevant geographical information for the battery passport, identifying risks in the upstream supply chain, and tracking the carbon footprint of each product. To learn more about how Sourcemap can prepare your company for the EU Batteries Regulation, reach out to our team of experts.