New Battery Regulations Raise the Bar
In the European Union, the landmark EU Battery Regulation (Regulation 2023/1542) came into effect on 18 February 2024, ushering in the world’s most comprehensive sustainability rules for batteries. This regulation, part of the EU Green Deal, is being phased in with progressive requirements. Notably, as of early 2025, every EV battery sold in Europe must carry a carbon footprint declaration – essentially a label disclosing the CO₂ emissions associated with producing that battery. By 2026, the EU will introduce carbon footprint performance classes to rank batteries by their emissions, and by 2028 it plans to enforce maximum carbon threshold limits, effectively banning the highest-emission batteries from the market. These rules compel battery manufacturers to closely track and cut greenhouse gas outputs across their supply chain, from mining to cell assembly.
The EU law also mandates strict due diligence for raw materials. Starting in 2025, companies placing batteries on the EU market must implement robust management systems to identify and mitigate social and environmental risks in their supply chains. This includes vetting suppliers for issues like child labor in cobalt mining or pollution from lithium extraction, and publicly reporting on their sourcing practices. While detailed guidance on the due diligence rules was expected by February 2025, EU officials temporarily delayed its publication, leaving some uncertainty. Nonetheless, the direction is clear – battery firms will be held accountable for what happens at the mine site and refinery, not just in their own factories. Furthermore, the regulation requires gradual increases in recycled content (for example, minimum recycled cobalt, lithium, and nickel in new batteries by 2030), higher collection and recycling rates for end-of-life batteries, and, crucially, the introduction of a digital battery passport by 2027 for each EV and industrial battery. The battery passport will be an electronic record accessible to authorities and purchasers, containing extensive data on the battery’s materials, manufacturing history, and sustainability metrics. This combination of lifecycle carbon limits, mandatory recycled material use, and full transparency is pushing the industry toward unprecedented levels of sustainability.
Regulatory momentum is not limited to Europe. South Korea amended its laws to require unique identification codes and disclosure of battery information from February 2025 for EV batteries, aiming to improve traceability and safety. In the United States, while there isn’t yet a federal battery-specific regulation, the 2022 Inflation Reduction Act (IRA) effectively acts as a compliance driver. The IRA’s tax credits for EVs strongly incentivize automakers to source battery minerals from approved countries and document the provenance. To qualify for these consumer rebates, car makers in 2024-2025 have been scrambling to verify the origin of lithium, nickel, cobalt, and graphite in their batteries and ensure a certain percentage comes from the U.S. or free-trade partners. This has led to a wave of supply chain audits and “friendly” sourcing deals (for instance, U.S. firms partnering with allies like Australia and Canada for critical minerals). China, for its part, has implemented its own battery recycling and reuse standards and is closely watching global trends, as Chinese battery champions must also adapt if they want to sell into markets like the EU. Overall, from Asia to North America, regulators are converging on the idea that transparent, sustainable battery supply chains are a matter of policy priority.
Industry Response: Data, Audits and Accountability
Facing these new expectations, companies across the battery value chain have moved from aspiration to action on ESG monitoring. A top focus is Greenhouse Gas (GHG) tracking: battery producers now routinely calculate the carbon footprint per battery pack and per cell, using standardized lifecycle analysis methods. Several major manufacturers have begun publishing Product Carbon Footprint reports for their batteries, in line with the EU rules. In fact, the global lithium industry, through the International Lithium Association, released new guidance in late 2024 for measuring the carbon footprint of lithium chemicals in a consistent way. By standardizing how lithium producers account for emissions, this helps ensure downstream battery-makers get accurate, comparable data – a key step as carbon transparency becomes mandatory. Many firms are also pursuing certification and audits for low-carbon production. For example, some cathode material suppliers have switched to using renewable energy and are obtaining third-party validation of the CO₂ per ton of output, knowing that battery OEMs will prefer inputs that help meet carbon limits. As one executive quipped, “What gets measured gets managed” – and the entire sector is now measuring a lot more.
Digital tools are being rolled out to manage the deluge of supply chain information. Companies are investing in specialized software platforms (some leveraging blockchain or cloud databases) to collect data from every supplier on material origin, refining processes, and even labor standards. These traceability systems feed into the upcoming battery passports as well as internal dashboards for ESG performance. Automakers like Volkswagen and Mercedes-Benz reported in 2025 that they have mapped their battery raw material supply chains multiple tiers deep, identifying the mines and smelters involved. They’ve increased on-site audits and are requiring suppliers to adhere to Responsible Mining and Responsible Sourcing standards or risk being phased out. Supplier accountability contracts are now common – cathode and anode material contracts often include clauses about providing carbon footprint data and ensuring materials are free of conflict and child labor. Some EV manufacturers have even tied executive bonuses to achieving certain ESG targets in the supply chain, underlining how core this has become to business success.
Transparency to the public is another part of the response. Nearly all leading EV and battery companies issued sustainability reports or disclosures in the past year detailing their battery sourcing and environmental impact. Notably, several automakers published “responsible raw materials” reports in 2024 that list their cobalt and lithium suppliers and describe how they audit them. This level of disclosure was unheard of a few years ago, but pressure from regulators, investors, and NGOs has made it the norm. Furthermore, companies are collaborating in industry groups to share best practices. Initiatives like the Global Battery Alliance, Responsible Minerals Initiative and others convene competitors to agree on common ESG metrics and auditing frameworks, which helps smaller suppliers get on board with compliance.
Crucially, the early evidence suggests these efforts are making an impact. Independent rankings (for instance, a 2023 Amnesty International scorecard on EV battery sourcing) have noted improvements in transparency year over year, though they call for further action. We are seeing the beginnings of a traceable battery “passport” system (ahead of formal passports in 2027) where a consumer can one day scan a code and see that, say, the nickel in their car’s battery came from a low-carbon mine in Canada, was refined in a plant using renewable energy, and that the battery was assembled in a factory running on green power. The journey is ongoing – challenges like data verification and protecting proprietary information remain – but the trajectory is clear. Under the combined push of new regulations and corporate sustainability commitments, the global battery industry in 2024-2025 has moved decisively toward greater ESG accountability and supply chain transparency. Every link in the chain, from mine to showroom, is being examined and improved so that the batteries powering the clean-energy revolution are themselves produced cleanly and responsibly.
Sources: EU Commission and Official Journal, Reuters, Compliance & Risks (Feb 2025), TheBatteryPass.eu (Jan 2025), Bloomberg, Korea Times, U.S. DOE statements, Volkswagen Group raw materials report, Amnesty International.
