Due Diligence Policy Obligations under the new EU Batteries Regulation – A 10-point guide to how economic operators should prepare

Overview of the EU Batteries Regulation

The new EU Batteries Regulation (EU) 2023/1542 has three main aims, namely to: (i) ensure that batteries placed on the EU market are sustainable, efficient and safe throughout their lifecycle; (ii) promote the circular economy by improving the collection, recycling, and reuse of battery materials; and (iii) ensure that raw materials for batteries are sourced responsibly with due diligence on environmental and human rights impacts.

The Regulation repeals Battery Directive 2006/66/EC and imposes stricter requirements on “economic operators” which are defined broadly to include manufacturers, producers, importers, and distributors of all types of batteries which are placed on the EU market. These batteries include portable batteries, automotive batteries, electric vehicle batteries, industrial batteries, and any batteries used for energy storage (except batteries used in essential security/military sectors). It also applies to batteries manufactured outside of the EU and made available for sale within the EU.

The Regulation establishes clear roles for economic operators at various stages of a battery's lifecycle, focusing on both market entry and recycling. Manufacturers must ensure their batteries comply with design, safety, and sustainability requirements before market entry, including limits on hazardous substances and minimum levels of recycled content. Importers and distributors are responsible for verifying that only compliant batteries are placed on the EU market, while recyclers and producers are required to meet specific collection, recycling, and reporting obligations. Extended producer responsibility (“EPR”) schemes ensure that producers finance the collection and recycling of waste batteries, facilitating a circular economy and minimizing environmental impacts. Compliance with these roles is enforced through labeling, documentation, and audits.

The requirements which the Regulation imposes on economic operators include obligations in relation to carbon footprint declarations, labels and QR codes, digital battery passports as well as due diligence policy obligations.

Due diligence policy obligations overview

One of the major features of the Regulation is that it imposes an obligation on all economic operators placing batteries on the market or putting them into service, except for SMEs, to draw up a due diligence policy to address the social and environmental risks linked to sourcing, processing and trading raw materials and secondary raw materials.

These provisions reflect the growing demand for transparency and accountability in global supply chains, particularly in the context of critical raw materials used in battery manufacturing.

The Regulation is directly applicable in all EU Member States since 18 February 2024 i.e. without the need for domestic implementing legislation. The due diligence provisions will be applicable as of 18 August 2025.

Exemptions

These due diligence policy obligations do not apply:

• to economic operators that had a net turnover of less than €40 million in the financial year preceding the last financial year, and that are not part of a group, consisting of parent and subsidiary undertakings, which, on a consolidated basis, exceeds the limit of €40 million.
• to economic operators in relation to the placing on the market or putting into service of batteries that have been subject to preparation for re-use, preparation for repurposing, repurposing or remanufacturing, if such batteries had already been placed on the market or put into service before undergoing such operations.
• Where a battery does not contain any of the minerals listed in Annex X of the Regulation (cobalt, natural graphite, lithium and nickel).

How economic operators should prepare

1. Human Rights and Environmental Standards: Establish and Implement Due Diligence Policy
   
   Economic operators must take responsibility for ensuring that their supply chains are free from human rights abuses, such as child labor or forced labor. They must also ensure that their sourcing activities do not lead to environmental degradation, particularly in regions where raw materials, like cobalt or lithium, are extracted.
   
   
2. Raw Materials Sourcing: Establish and Implement Due Diligence Policy
   
   Economic operators must pay special attention to the sourcing of critical raw materials, including lithium, cobalt, nickel, and graphite. These materials, essential for battery production, often come from regions where there are significant risks of human rights violations or environmental harm. The due diligence process must ensure that suppliers adhere to internationally recognized social and environmental standards.
   
   
3. Conflict-Affected and High-Risk Areas (CAHRAs): Establish and Implement Due Diligence Policy
   
   For economic operators sourcing raw materials from conflict-affected or high-risk areas, the Regulation emphasizes the need for enhanced due diligence procedures. Economic operators are required to identify, assess, and mitigate risks related to the extraction, trading, and processing of materials from these regions. This is in line with existing EU Regulations, such as the Conflict Minerals Regulation (Regulation (EU) 2017/821).
   
   
4. Risk Assessment: Regularly assess supply chains to identify, prevent, and mitigate risks.
   
   This includes evaluating suppliers' human rights, labor, and environmental practices, as well as the geopolitical risks associated with sourcing materials from certain regions.
   
   Identifying high-risk areas in the supply chain helps prevent harm before it occurs, ensuring that companies avoid supporting unethical practices like child labor or environmentally destructive mining.
   
   
5. Risk Management: Develop and implement risk management strategies to address identified risks, including remediation actions and disengagement from non-compliant suppliers.
   
   This may involve switching to suppliers with better track records, providing training and capacity-building programs for suppliers, or working with industry groups to improve standards across the supply chain.
   
   This provides a framework for responding to supply chain risks in a structured manner. It ensures operators actively engage in mitigating risks, rather than merely identifying them.
   
   
6. Grievance mechanisms: Establish grievance mechanisms that allow workers and communities affected by operations to report abuses or violations.
   
   These mechanisms should be accessible, transparent, and aligned with the UN Guiding Principles on Business and Human Rights.
   
   
7. Third-Party Audits: Engage independent third-party auditors to verify supply chain due diligence compliance and ensure transparent, impartial monitoring.
   
   The Regulation mandates regular independent third-party audits to verify compliance with the due diligence obligations. These audits must assess both the company’s internal due diligence systems and its suppliers' practices. Audit results must be publicly available, fostering greater transparency and trust within the market.
   
   
8. Transparency and Disclosure: Publicly report on due diligence efforts, including sourcing information, risk mitigation measures, and supply chain monitoring.
   
   This information must be accessible to the public and regularly updated. Transparency is central to ensuring accountability in supply chains, allowing stakeholders, including consumers and investors, to assess the sustainability of a company’s operations.
   
   
9. Collaboration with Suppliers: Require suppliers to adopt equivalent due diligence policies and provide relevant information to assess compliance across the supply chain.
   
   This promotes responsible sourcing throughout the supply chain by ensuring that all suppliers adhere to the same standards. This ensures a ripple effect, encouraging good practices upstream.
   
   
10. Alignment with International Standards: Align due diligence policies with international frameworks, such as the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.
    
    Aligning with recognized global standards helps create consistency and accountability across supply chains, ensuring practices are universally accepted and well-vetted.

Conclusion

By fulfilling these obligations economic operators which place batteries on the EU can proactively address the ethical, environmental and human rights challenges within their supply chain, thereby promoting sustainability, transparency, and social responsibility.

Economic operators that fail to comply with these due diligence obligations could face penalties, sanctions, or exclusion from the EU market.

By 18 August 2025 EU Member States need to lay down the rules on penalties applicable to infringements of the Regulation which are effective, proportionate and dissuasive.

Get in touch

Lawrence Freeman
Senior Counsel, Bird & Bird, Brussels

[email protected]

About the author: Lawrence Freeman is a Senior Counsel based in Bird & Bird's Brussels office with over 30 years of experience handling issues of European regulatory, competition, and commercial law both in private practice and in-house roles.

Lawrence joined Bird & Bird in 2018 after having spent 5 years as European Counsel of Tesla, Inc. where he founded the European legal department. At Tesla Lawrence advised both on day-to-day and on highly strategic legal and regulatory issues and developed a unique expertise in regulatory issues regarding electric, connected and autonomous vehicles.

Lawrence is admitted as a Solicitor (England and Wales) and is a member of the Brussels Bar.