The EU Batteries Regulation replaced the legacy Batteries Directive of 2006 and came into force on 17 August 2023. The cradle-to-grave regulatory framework aims to govern the entire life cycle of batteries from design to management and disposal – a landmark initiative to strengthen the decarbonisation process and the Circular Economy Action Plan. It is a key element of the European Green Deal and aims to increase the security of supply for raw materials while enhancing the EU’s strategic autonomy and market competitiveness. The regulation will apply to all batteries placed on the EU market. It includes portable, automotive, electric vehicle (EV), industrial, and starting, lighting and ignition (SLI) batteries (used primarily for vehicles and machinery), as well as batteries for light means of transport (LMT) such as electric bikes, e-mopeds, and e-scooters. The regulation sets mandatory requirements for end-of-life processes, such as collection and recovery targets and Extended Producer Responsibility (EPR) rules. The rigorous due diligence obligations require operators to monitor and verify the source of raw materials for batteries entering the EU market. The EU Batteries Regulation aligns with global due diligence standards and practices set by the UN, ILO, and OECD, creating a level playing field for businesses while improving supply chain management practices.

The new regulation supports three critical aspects of the overarching EU ambitions of sustainability and self-reliance: promoting a circular economy, improving the functioning of the internal market, and reducing adverse impacts on the environment and society.

Circular economy
 The regulation specifies targets for producers to collect waste portable batteries (63% by the end of 2027 and 73% by the end of 2030) and introduces an exclusive collection goal for waste batteries for LMT (51% by the end of 2028 and 61% by the end of 2031). The regulation establishes a goal for lithium retrieval from waste batteries of 50% by the end of 2027 and 80% by the end of 2031, which is subject to amendments depending on market fluctuations, technological advancements, and accessibility of lithium.

The regulation provides for minimum thresholds for recycled content for industrial, SLI and EV batteries. Currently, the minimum levels are set at 16% for cobalt, 85% for lead, 6% for lithium and 6% for nickel. It establishes a requirement to provide documentation for recycled content. The recycling efficiency mark for nickel-cadmium batteries is set at 80% by the end of 2025 and 50% by the end 2025 for other waste batteries. The regulation requires that by 2027, portable batteries integrated into devices be detachable and replaceable by the end-user. Batteries for LMT will require replacement by a professional service provider.

Functioning of the EU market
The new safety, sustainability and labelling rules aim to enhance the functioning of the EU battery market. The regulation imposes performance, durability, and safety standards on batteries, along with strict restrictions on hazardous substances such as mercury, cadmium, and lead. It mandates carbon footprint disclosure and requires battery labelling and a QR code, with enforcement starting in 2026 and 2027, respectively.

Public disclosure of due diligence policy
Companies operating in the EU market must demonstrate responsible sourcing of the materials used for battery manufacturing. Negative social and environmental impacts associated with raw material extraction, refinement and trading must be identified, managed, and successfully mitigated. Economic operators are subject to strict public disclosure rules of battery due diligence policy, including the data and information on the steps taken to comply with the requirements. It should also include any significant adverse impacts found in the specified risk categories in the legislation and how they were addressed. Additionally, a summary report of third-party verifications should be provided while respecting business confidentiality and competitive concerns. The report should also address access to information, public participation in decision-making, and access to justice in environmental matters related to the sourcing, processing, and trading of the raw materials used in batteries.

 The sustainability provisions will be gradually introduced from 2024 and EPR measures will start applying by mid-2025 with progressively higher collection targets being implemented. The phased approach gives operators a reasonable period to adapt the battery design to the requirements and steadily implement the provisions associated with production, processing, reuse and recycling.

Critical action points for companies
 The EU Batteries Regulation marks a significant transformation for the battery industry. The transition of the Batteries Directive of 2006 to a harmonised regulation across the EU simplifies compliance and levels the playing field across the market. However, more stringent standards apply for critical metal recovery, material use, recycling targets, labelling, calculation, and disclosure of carbon footprints. The new sustainability and transparency objectives will impact a wide range of businesses engaged in the manufacturing, distribution, retail and recycling of batteries.

 As an initial step, Swiss and other international businesses operating in the EU can leverage their existing due diligence practices based on authoritative international instruments, such as the ILO standards and the OECD responsible sourcing guidelines. Since the holistic Batteries Regulation aligns with these frameworks, companies can build on existing legal and best-practice concepts, creating synergies and minimising redundancy. These practices can be especially beneficial for the extraction, processing and trading of natural mineral resources used in battery production. Moreover, businesses can achieve similar benefits by applying the EU sustainability regulations, and tailoring standards and principles to their specific contexts.

 Regarding the specifics of the Batteries Regulation, businesses must pay attention to the production of sustainably designed and more resource-efficient batteries. It is advisable to explore alternative materials and technologies to minimise the use of hazardous substances. Equally important is establishing efficient collection systems, as they are crucial in meeting the ambitious targets outlined in the legislation. A critical factor is third-party management, which is achieved through active engagement with suppliers to facilitate the ethical sourcing of materials. Furthermore, compliance with labelling requirements entails furnishing precise details regarding the battery composition, durability, safety standards, and environmental performance. Finally, high-quality reporting and public disclosure practices based on a sound risk management system and robust internal controls and documentation of compliance endeavours will boost the credibility of companies.

 To maintain a competitive edge, alignment with acknowledged international standards to avoid duplication, increased investment in research and development to reduce the environmental consequences, improved supply chain management to limit the risks of non-compliance, and effective collaboration across the stakeholder community to develop industry-wide solutions are paramount. For continued access to the EU market, businesses must stay informed about the specific requirements, take pre-emptive measures and seek expert guidance when needed.

Thank you to Dr Sangeeta Mohanty for her contribution to this blog. 

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Hevin Demir - Partner, Global Trade Advisory Lead

Hevin is leading the Global Trade Advisory Practice at Deloitte Switzerland. She has a legal background (attorney at law) and she worked on both sides, consulting and industry. She specialized in customs process optimization, digitalization and compliance. She started her career in Germany and worked there for 6 years, where she gained  detailed knowledge of EU trade regulations and practice as well as more than 9 years of experience in Switzerland, where she advised global players in various international  projects. As in house Global Customs expert or as advisor, she made it a priority to provide practical and operational solutions, while improving compliance, transparency and efficiencies.

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Philipp Weber-Lortsch - Director, Global Trade Advisory

Philipp is an attorney & compliance specialist focusing on global trade and multinational enterprises. He is committed to designing more compliant, ethical and resilient supply chains, while navigating through export control, customs, sanction, sustainability and other relevant regulations governing global trade.

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