EU Battery Regulations are finalised: What next?

This month, the EU regulators provisionally agreed new regulations for batteries sold in the EU. It is already hailed as a “game changer” for batteries, creating a framework to foster a competitive and sustainable battery industry in Europe. So what are the EU Battery Regulations exactly? And what do manufacturers need to do to stay ahead of the regulation?

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A quick guide to the EU Battery Regulations

Originally proposed in December 2020, the EU Battery Regulations are progressive requirements to ensure all batteries placed on the EU market are more sustainable, circular and safe across the entire lifecycle. For electric vehicles and industrial batteries with a capacity above 2 kWh, the requirements primarily fall on battery makers and are divided between (1) ensuring more transparent and responsible sourcing practices and (2)  facilitating the circular economy (see Figure 1).

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Getting ahead of the curve: How companies can respond to meet the upcoming regulations

The regulation starts to come into force in 2024, meaning that companies have to act now to establish the necessary foundations to meet and exceed the requirements:

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Know all your impacts

It goes without saying that batteries are more sustainable than their fossil fuel counterparts, however they are not void of negative sustainability impacts. Whilst carbon emissions gets the most attention, the impacts associated with battery supply chains are much wider – from water usage, to child labour and end-of-life waste – and this is a driving force behind the scope of the EU Battery Regulation.

Companies will therefore need to understand the wider variety of environmental and social impacts of their direct operations and supply chains. And to appropriately measure, reduce and/or eliminate these impacts, companies must develop targeted and tailored strategies based on their current performance and processes.

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Prioritise collaboration in the supply chain

While battery manufacturing itself is often an impact-heavy process, many of the sustainability impacts associated with batteries can be found in the supply chain, such as carbon emissions stemming from the mining and refining processes. Therefore not only is data important for companies to meet the regulation, but so are the processes and systems that allow the supply chain sustainability to be managed and improved.

The EU Battery Regulations have accounted for this, putting in place requirements for all economic operators placing batteries on the EU market (except small- and medium-sized enterprises) to develop and implement due diligence policies that are consistent with international standards. As such, battery manufacturers will need to implement systems to communicate and collaborate with their suppliers, such as supplier sustainability questionnaires, ongoing performance sharing, audits of high risk suppliers and improvement programmes.

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Report, improve and be ready to be compared

Once companies understand their impacts and put in place the systems and processes to improve their company and supply chain sustainability, they need to report on their performance. Standardised reporting is a key component of sustainability legislation, and the EU Battery Regulations are no different.

Since reporting drives comparison and provides stakeholders with more decision-making power, the EU battery Regulations aim to create the incentives needed for companies to improve their sustainability performance. Battery manufacturers can prepare for this by developing a systematic approach to reporting that allows them to effectively communicate their impacts, their progress and how they relate to others in the sector.

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Where to next?

The EU Battery Regulations are part of a wider set of global regulations aimed at improving the sustainability of the battery industry. The EU regulators still need to formally approve the regulations and develop guidelines for implementation. However battery manufacturers looking to differentiate themselves and be sustainability leaders need to act now. In sum, they can do this by investing their resources in understanding their sustainability impacts alongside regulation requirements, managing and improving their supply chain sustainability processes and reporting on their progress in a standard way. While this may seem daunting, there is still time to act.

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