The Battery Regulation lays down specific due diligence requirements for economic operators
The European Union is pushing ahead with the implementation of the Green Deal. The number of regulations designed to ensure the sustainability of products and supply chains is steadily increasing. General due diligence requirements for the protection of human and environmental rights are reflected in the EU Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), which is currently pending as a European Parliament resolution. Simultaneously, individual member states are developing national legislation or have already done so, such as the Supply Chain Due Diligence Act (LkSG) in Germany.
However, also product-specific legal acts contain regulations that impose obligations on the economic actors concerned. Already under the EUDR and the EUTR, economic operators are obliged to comply with special sector-specific standards when assessing and minimising risks within their supply chains. Regulation (EU) 2023/1542 concerning batteries and waste batteries (Battery Regulation) , which entered into force on 12/07/2023 and will be gradually applied from 18/02/2024, also contains specific obligations that are at the interface between the provisions of the EU Conflict Minerals Regulation and the general regulations of the LkSG and the CSRD.
Who is addressed by the due diligence requirements of the Battery Regulation?
The additional requirements for corporate due diligence (Art. 47 et seq. Battery Regulation) apply to economic operators within the meaning of the Battery Regulation (Art. 3 No. 22 Battery Regulation) who either themselves or throughout the group generated a net turnover of more than 40 million euros in the penultimate business year. Economic operators who reuse or repurpose batteries already placed on the market or put into service in the European Union (so-called second-life batteries) are excluded.
Due diligence requirements under the Battery Regulation
The due diligence obligations under the Battery Regulation are intended to help identify, prevent and address actual and potential social and environmental risks associated with the sourcing, processing and trading of raw materials and secondary raw materials required for battery production, including through suppliers in the chain and their subordinate companies or entities or contractors.
In particular, economic operators addressed by the due diligence obligations of the Battery Regulation are required to develop, establish and maintain a risk management system (Art. 49 Battery Regulation).
As already provided for in the CSRD, affected companies must have the strategies developed to fulfil the due diligence obligations as well as their implementation reviewed by an independent notified body (Art. 48 (2) Battery Regulation). Such a requirement is not yet provided for in the LkSG.
In addition, the companies concerned are subject to extensive information obligations, for example vis-à-vis purchasers (Art. 52 (2) Battery Regulation) and the downstream supply chain as well as the public (inter alia Art. 49 (1) (a) Battery Regulation).
What is new is that systemic fulfilment of due diligence obligations by way of scheme development is explicitly provided for (Art. 53 Battery Regulation). The Commission can accredit governments, industry associations or organisations as so-called “scheme owners” if they have developed and oversee a scheme that ensures the fulfilment of due diligence obligations in accordance with the Commission’s requirements. Such schemes are thus recognised as equivalent with the due diligence standards under the Battery Regulation.
However, important questions remain unanswered and pose new challenges for economic operators. How do the due diligence requirements of the Battery Regulation fit into national regulatory landscapes that have to be enacted on the basis of EU directives? Who is responsible for monitoring the implementation of due diligence obligations under the Battery Regulation, especially in the light of scheme owner solutions?
Conclusion
Once again, the opportunity to increase human rights and environmental protection through coherent legal regulations and obligations has been missed. Instead, economic actors face the next challenges during the implementation of the CSRD and the LkSG.
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