The European Union has enacted a new regulation, EU Batteries Regulation (EU) 2023/1542, which aims to enhance the sustainability, efficiency, and safety of batteries throughout their lifecycle. The regulation focuses on three primary objectives:

1. Sustainable and Safe Batteries: Ensuring that all batteries placed on the EU market are designed for sustainability and safety.
2. Promoting Circular Economy: Improving the collection, recycling, and reuse of battery materials to foster a circular economy.
3. Responsible Sourcing of Raw Materials: Ensuring that raw materials for batteries are sourced responsibly, with due diligence on environmental and human rights impacts.

Key Changes from Previous Regulations

The new regulation repeals the earlier Battery Directive 2006/66/EC and imposes stricter requirements on "economic operators," a broad category that includes manufacturers, producers, importers, and distributors of all battery types, including:

• Portable batteries
• Automotive batteries
• Electric vehicle batteries
• Industrial batteries
• Energy storage batteries (excluding those used in essential security/military sectors) The regulation applies to batteries manufactured outside the EU and made available for sale within the EU.

Responsibilities of Economic Operators

Economic operators are assigned clear roles at various stages of a battery's lifecycle, emphasizing compliance and recycling:

• Manufacturers must ensure batteries meet design, safety, and sustainability requirements before market entry, including limits on hazardous substances and minimum recycled content.
• Importers and Distributors are responsible for verifying that only compliant batteries are sold in the EU market.
• Recyclers and Producers must meet specific collection, recycling, and reporting obligations. Extended Producer Responsibility (EPR) schemes require producers to finance the collection and recycling of waste batteries.

Compliance is enforced through labeling, documentation, and audits.

Due Diligence Policy Obligations

A major feature of the regulation is the due diligence policy obligations imposed on all economic operators, except for SMEs. This policy must address social and environmental risks associated with sourcing, processing, and trading raw materials and secondary raw materials.

Key aspects include:

• Human Rights and Environmental Standards: Operators must ensure supply chains are free from human rights abuses and environmental degradation.
• Raw Materials Sourcing: Special attention must be given to sourcing critical raw materials like lithium, cobalt, nickel, and graphite, ensuring suppliers meet internationally recognized standards.
• Conflict-Affected and High-Risk Areas (CAHRAs): Enhanced due diligence is required for materials sourced from high-risk regions.
• Risk Assessment and Management: Operators must regularly assess supply chains to identify risks and develop strategies to mitigate them.
• Grievance Mechanisms: Accessible mechanisms must be established for workers and communities to report abuses.
• Third-Party Audits: Regular audits by independent third parties are required to ensure compliance with due diligence obligations.
• Transparency and Disclosure: Operators must publicly report on their due diligence efforts and risk mitigation measures.
• Collaboration with Suppliers: Suppliers must adopt equivalent due diligence policies.
• Alignment with International Standards: Policies should align with frameworks like the OECD Due Diligence Guidance.

Implementation Timeline and Exemptions

The regulation is directly applicable in all EU Member States from February 18, 2024, without the need for domestic implementing legislation. The due diligence provisions will take effect on August 18, 2025.

Exemptions from the due diligence obligations apply to:

• Economic operators with a net turnover of less than €40 million in the previous financial year (not part of a larger group).
• Operators dealing with batteries that have undergone preparation for reuse or repurposing, provided these batteries were already placed on the market.
• Batteries not containing minerals listed in Annex X of the regulation (cobalt, natural graphite, lithium, and nickel).

The EU Batteries Regulation represents a significant step toward enhancing the sustainability and responsibility of battery production and use. By enforcing stricter requirements and promoting transparency in supply chains, the regulation aims to mitigate environmental and social risks associated with battery manufacturing and disposal.