The EU Batteries Regulation (EUBR) will place strict due diligence obligations applying to all companies that deal in batteries in the EU. Since the demand for batteries is tipped to increase by a staggering 14 times by 2030, the scope of the new regulation is significant. Companies that trade goods produced with the battery products and minerals that the EUBR covers, could see their EU Battery Passports revoked, therefore losing EU market access, if their due diligence policies aren’t charged and ready.
Human rights, social and labor abuses have been well documented in battery supply chains. It’s been nine years since Amnesty International’s report highlighted mismanagement and human rights abuses in the DRC mining supply chain. Since then, BHRCC has collected 600+ allegations in the sector, but the real number of unreported incidents is thought to be much higher. As Europe charges ahead with electrification and demand for electric vehicles rises, the risks for companies to be caught up in shocking human rights scandals or to suffer EUBR non-compliance and massive fines increases.
The battery and minerals sectors face specific due diligence challenges. There is a lack of data, a lack of transparency, and the risk that sourcing origins are linked with Conflict Affected and High Risk Areas (CAHRA). Companies can take action and reduce these risks by working with Ulula. Ulula can support the battery industry to future-proof its due diligence efforts, achieve their policy goals, and maintain strong relationships with workers and communities who, in turn, help them keep their due diligence policies current.
What is the EU Batteries Regulation (EUBR)?
The EU Batteries Regulation came into force in August 2023. From August of 2025, the due diligence aspects of the Regulation will become mandatory. The EUBR is a flagship policy of the EU Green Deal, and places a number of human rights due diligence obligations on companies that trade batteries and battery powered products in the EU.
The EUBR covers Cobalt, natural graphite, lithium and nickel
The EUBR covers:
- Cobalt, natural graphite, lithium and nickel;
- Economic operators that had a net turnover of more than EUR 40 million in the preceding financial year;
- Companies selling batteries with a capacity above 2 kWh.
Alongside the Conflict Minerals Regulation and the Forced Labor Regulation, the EUBR sits within a suite of supply chain due diligence obligations that companies trading battery and mineral related products in the EU will need to comply with. The private sector is already moving forward. Organizations like the Global Battery Alliance, Initiative for Responsible Mining Assurance, and initiatives such as the Responsible Minerals Initiative and the Cobalt Industry Responsible Assessment Framework all boast some of the industry’s biggest players as benefactors and members.
What are the due diligence requirements of the EUBR?
The due diligence requirements of the EUBR broadly follow the spirit of the OECD Responsible Business Conduct framework, which is referenced heavily in the Regulation itself. Specifically, economic operators subject to the Regulation need to:
- Establish a management system for identifying, assessing, mitigating and removing human and labor rights risks in their battery supply chain;
- Implement their policies and show proof of their implementation in annual reporting;
- Carry out third party verifications;
- Disclose information to the European Commission and have their due diligence policy recognized as a licensed scheme by the European Commission.
Articles 49 and 50 of the regulation impose due diligence obligations on economic operators, requiring them to establish risk management systems, conduct supply chain audits, and report on their efforts to mitigate potential negative impacts.
The requirements of the EUBR follow the OECD Responsible Business Conduct framework
In accordance with the Regulation itself, “when putting in place a risk-based battery due diligence policy, the economic operator should base it on internationally recognized due diligence standards and principles.”
Regular risk assessments will therefore be required to assess the value chain for human and labor rights risks. The kinds of risks that are covered by the Regulation include human rights, human health and safety of persons as well as occupational health and safety, and labor rights.
Affected entities must also establish a grievance mechanism, including an early-warning risk-awareness system and a remediation mechanism. Risk mitigation policies required, as is third party verification, and the gathering of information from stakeholders where relevant.
Affected entities must then create and make public a battery due diligence policy. Notably, company directors are considered the responsible persons for this, which opens the door for member states to establish personal liability and potential prison sentences when they outline their penalty regimes.
Enforcement through market surveillance and penalties to be enforced by national competent authorities, however, the Commission is expected to issue guidance on this penalty regime in mid-late 2025.
Dig Deeper: Due Diligence is Different in the Batteries and Mining Sectors
Mining and batteries face complex challenges when implementing effective due diligence. Low visibility, growing regulations, increased demand and immature due diligence policies heighten human rights risks in the mining and batteries sectors, which could leave companies blindsided by non-compliance risks.
Local community action can incur millions in daily losses for a company
It’s not only about compliance either, operational risk is particularly acute for the extractive industries, where local community action can incur millions in daily losses for a company. As a social license to operate is an operational and legal imperative, companies have to dig deeper, get in touch with communities, and build the capacity to hear their concerns, so they can act before risks become costly.
Companies operating in the area don’t need to be reminded of the cost of a scandal, and with the sector growing rapidly, the risks of being associated with a mining or EV human rights scandal are growing too. Policies to enable social compliance must be dynamic enough to overcome complex, localized issues and accurately reflect realities on the ground.
Keep your Due Diligence Policy at Full Charge with Ulula
Meaningful stakeholder engagement is an essential pillar of any modern due diligence policy. That’s why the OECD released a guide dedicated solely to the subject. Ulula can support the establishment of a modern, efficient grievance system that exemplifies these due diligence best practices by integrating stakeholder voice primary risk data into company risk assessments and due diligence processes.
Ulula’s digital tools also allow for the preventive identification of potential risks with its anonymous, ongoing surveys. Consent is key to success in the mining industry, and digital tools allow companies operating in the sector to activate stakeholder engagement at scale, securing their license to operate.
Ulula’s tools allow for the identification of potential risks with its anonymous, ongoing surveys.
Ulula makes both compliance and community engagement possible at-scale through multichannel surveys and information broadcasts, presenting an opportunity to advance social dialogue with communities and workers. These surveys and communication tools are anonymous, multilingual, customizable, available anywhere at any time, aligned with international indicators, and provide report-ready and auditable data. There’s no battery needed, because it’s powered by the workers themselves.
Advance meaningful dialogue with workers, root out child labor and modern slavery, electrify your EUBR compliance policy and strengthen your license to operate with Ulula.
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