8 Practical Steps to Start Your Battery Supply Chain Due Diligence

Supply Chain Due Diligence for Battery Materials is the systematic process of identifying and mitigating ESG risks (human rights, labour, and environmental) in the sourcing of lithium, cobalt, nickel, and graphite. 

Under the EU Battery Regulation (EU) 2023/1542, companies placing batteries on the EU market must demonstrate responsible sourcing, risk management, and transparency across their upstream supply chains, in line with OECD Due Diligence Guidance.

Where to Start: The 8 Practical First Steps

 The Critical 2026/2027 Deadlines

The EU has officially postponed the most complex due diligence requirements to allow the industry and auditors (Notified Bodies) more time to prepare.

• July 26, 2026: The European Commission will publish the official Due Diligence Guidelines (the "rulebook").
• February 18, 2027: The Digital Battery Passport (DBP) becomes mandatory for all batteries over 2kWh.
• August 18, 2027: The Final Deadline for mandatory Third-Party Verification of supply chain due diligence.

1. Map your battery material supply chain

The first step is identifying all direct (Tier-1) and critical upstream (Tier-2) actors, such as refiners and processors. Under EU 2023/1542, you must document supplier names, locations, and the specific priority materials provided (lithium, cobalt, nickel, and graphite). Focus on identifying whether materials originate inside or outside the EU to establish a baseline for your traceability system.

2. Identify material origin and high-risk links

You must determine the country of origin and specific mining/refining sites for each priority material to flag potential ESG risks. Since certain regions and extraction methods carry systemic risks (e.g., child labour or environmental damage), this step involves cross-referencing your supplier data against global risk indices. The goal is to gain full visibility into the highest-risk links so they can be addressed proportionately in your mitigation strategy.

3. Perform a risk assessment and mitigation strategy

Once materials and origins are known, assess risks related to:

• Human rights (e.g., child labour, forced labour)
• Labour conditions (e.g., health and safety, living wages)
• Environmental harm (e.g., water contamination, biodiversity loss)
• Corruption or weak governance

The EU Battery Regulation aligns closely with the OECD Due Diligence Guidance, which requires more than just identifying risks—it necessitates a comprehensive risk management plan.

The "Mitigate or Disengage" Rule: If a risk is identified, you are not always expected to cut ties immediately. The regulation encourages a "progressive" approach:

• Mitigation: If the supplier is willing to improve, you must document a plan to help them resolve the issue within a set timeframe.
• Suspension: If the risk is significant, you may temporarily halt sourcing while the supplier fixes the issue.
• Disengagement: As a last resort, if the supplier refuses to improve or the risk is severe (e.g., systemic human rights abuses), you must terminate the relationship.

Important: Low-risk suppliers require lighter controls. High-risk links require enhanced scrutiny and a documented mitigation track record. This documentation is what auditors will look for to prove you are managing your chain actively, not just passively.

4. Collect supplier declarations and supporting evidence

Ask suppliers to provide:

• Due diligence policies
• Self-declarations on responsible sourcing
• Available audit reports or certifications

This is where many companies overcomplicate things. The expectation is reasonable assurance, not forensic audits across the entire chain.

Document what you receive, flag gaps, and record follow-up actions. This documentation becomes critical for both market surveillance checks and Battery Passport data inputs.

5. Prepare documentation for audits and the Battery Passport

Supply chain due diligence is not a standalone obligation. It feeds directly into:

• Battery Passport disclosures
• Market surveillance inspections
• Procurement and OEM qualification processes

At a minimum, you should be able to demonstrate:

• A documented due diligence process
• Risk identification and mitigation actions
• Ongoing monitoring and annual review

This turns due diligence from a one-off exercise into a living compliance process.

6. Establish a grievance mechanism for early risk detection

Supply chain due diligence is not just a top-down reporting exercise; it requires a bottom-up "early warning system." Under the EU Battery Regulation (Article 49) and OECD standards, companies must provide a way for stakeholders to voice concerns.

What this looks like in practice:

• A "Whistleblower" Channel: An accessible, confidential platform (such as a portal or hotline) where workers, NGOs, or local communities can report issues like safety violations or human rights abuses.
• Accessibility: The mechanism should be available in the local languages of your sourcing regions (e.g., French for DRC cobalt or Spanish for South American lithium).
• A Process for Remedy: Simply receiving a complaint isn't enough. You must have a documented process for investigating the claim and, if verified, taking action to "remedy" the harm caused.

Pro Tip: You don't always need to build your own. Small and medium-sized enterprises (SMEs) can often join collaborative grievance mechanisms run by industry associations (like the RMI) to share the administrative load.

7. The Mitigation Phase: Fix, Don't Just Flag

Risk assessment (Step 3) is useless without a Risk Management Plan. If you identify a high-risk link, you have three choices under the regulation:

• Continue and Mitigate: Work with the supplier to improve their standards (the preferred "progressive" approach).
• Suspend: Temporarily halt sourcing while improvements are made.
• Disengage: Terminate the relationship if the risk is severe or unfixable.

Key Tip: Documenting how you tried to help a supplier improve is often more valuable to an auditor than simply firing them at the first sign of trouble.

8. Third-Party Verification (The "Notified Body")

While your internal team is currently undertaking the groundwork, the EU Battery Regulation requires that your due diligence scheme be verified by a third party (Notified Body) by August 18, 2027. This is not a "self-declaration" regime. Although the deadline was postponed from 2025, most major OEMs are already requiring this verification in 2026 contracts to ensure they are ready for the Battery Passport launch in early 2027.

Common Pitfalls to Avoid (Short but Powerful)

• Waiting for perfect upstream data before starting
• Treating due diligence as a one-time compliance task
• Confusing Battery Regulation requirements with CSRD reporting
• Failing to document decisions and risk rationale

How This Connects to the Digital Battery Passport

Supply chain due diligence data underpins several Battery Passport elements, including:

• Responsible sourcing declarations
• Material traceability indicators
• Regulator-only compliance verification

While sensitive supplier and risk data is not publicly visible, authorities must be able to verify that due diligence has been performed consistently and credibly.

How supply chain due diligence feeds into the Battery Passport

Supply chain due diligence does not sit in isolation. The data you collect on material origin, risk assessments, and mitigation actions becomes a foundational input for the Digital Battery Passport, particularly where regulators need to verify responsible sourcing claims. In practice, this information is surfaced through the battery’s QR code, with different data made available depending on the user’s role. 

Public users see high-level sustainability indicators, while recyclers and authorities access more detailed compliance information. Understanding how due diligence data flows into public versus restricted Battery Passport disclosures is essential for building a compliant, IP-safe data strategy.

FAQs

1. Does this regulation apply to my company?

The due diligence obligations apply to any "economic operator" placing batteries on the EU market with a net annual turnover of more than €150 million (on a consolidated group basis). This threshold was updated in 2025 to focus specifically on large-scale operators.

2. When do I need to be fully compliant?

While the EU Battery Regulation is already in force, the specific enforcement for supply chain due diligence has a critical milestone:

August 18, 2027: This is the revised deadline by which your due diligence systems must be fully operational and verified by a third party. However, most OEMs now require this data as part of their 2026 procurement contracts to prepare for the February 2027 Battery Passport launch.

3. Which materials are covered under "Due Diligence"?

Currently, the regulation focuses on four key "priority" materials:

• Lithium
• Cobalt
• Nickel
• Natural Graphite It also covers any chemical compounds derived from these materials that are used in the production of the battery’s active materials.

4. What is a "Notified Body" and how do I find one?

A Notified Body is an independent auditing organisation authorised by EU member states to verify compliance. You can find a list of these accredited organisations on the EU’s NANDO database. It is your responsibility to contract one of these bodies to audit your due diligence policy and management systems.

5. What happens if a supplier refuses to provide data?

The regulation expects "reasonable assurance." If a supplier is non-cooperative:

1. Document your efforts: Keep a log of all communication and requests.
2. Risk Mitigation: Categorise that supplier as "High Risk" and attempt to find secondary sources of verification (e.g., industry-wide reports).
3. Future Planning: If the data gap is significant, you may eventually need to consider switching to a supplier that can guarantee transparency to maintain your own EU market access.

Source 

OECD Due Diligence Guidance.

EU Battery Regulation (EU) 2023/1542

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