Industry Response to Changing Landscape
Facing this changing landscape, companies throughout the battery value chain took proactive steps in late 2024 to bolster traceability and sustainability. Several leading automakers and battery producers rolled out digital tracking systems for their supply chains. For instance, European automakers began implementing pilot battery passport systems internally, scanning QR codes on battery packs to trace raw material origins and recycled content in preparation for EU rules . Auto giants like Mercedes-Benz and Volkswagen reportedly intensified oversight of their cobalt and lithium suppliers, conducting deeper audits down to the mine level to ensure compliance with upcoming due diligence laws . Major cell manufacturers in Asia joined in these transparency efforts. Companies such as CATL, LG, and Samsung SDI not only participated in GBA’s passport pilots, but also invested in data systems to map their supply chains and identify high-risk links. These efforts are geared toward meeting the EU Battery Regulation’s traceability requirement that critical minerals be tracked from extraction to battery manufacturing . Early adoption of traceability tech and reporting frameworks is helping firms get ahead of regulatory deadlines and build trust with customers and regulators.
At the same time, companies pursued risk mitigation strategies to address the social and ethical issues in battery material sourcing. One approach has been to reduce reliance on minerals commonly associated with human rights risks, especially cobalt from the Democratic Republic of Congo. Several battery makers accelerated a shift toward cobalt-free chemistries like lithium iron phosphate (LFP) for mainstream EV batteries. Notably, China’s CATL and BYD, and increasingly Western automakers for entry-level models, expanded use of LFP cathodes which contain no cobalt or nickel . While LFP has slightly lower energy density, its rising popularity globally in 2024 demonstrated that innovation in chemistry can help mitigate social risk by phasing out the most problematic minerals. For critical materials that cannot be eliminated, companies are diversifying sources and demanding higher standards from suppliers. For example, in 2024 several battery material suppliers struck deals for “low-ESG-risk” sources: Belgian cathode maker Umicore signed new contracts for nickel and cobalt intermediates from Morocco and South Korea, citing the partners’ advanced low-carbon facilities and strong environmental practices . Automakers likewise inked offtake agreements directly with mines in jurisdictions like Australia and Canada, aiming to secure lithium and graphite from mines with robust labor and environmental management (and to reduce dependence on any single country). This geographic diversification is both a supply resilience strategy and a response to legislation (e.g. the EU not allowing over 65% dependence on one country per CRMA ).
Crucially, independent audits and certifications have become a cornerstone of supply chain risk management. In 2023–24, the Initiative for Responsible Mining Assurance (IRMA) saw its first certifications of lithium mining operations in Chile – by late 2023 all major lithium mines in the Atacama desert had undergone IRMA’s rigorous third-party assessment . IRMA audits measure a mine’s performance on labor rights, community impact, and environmental protection, giving downstream buyers verified data on how responsibly those raw materials were produced . The fact that major EV manufacturers like BMW and Ford are members of IRMA and urging their mineral suppliers to get certified underscores a trend: **downstream companies are leveraging such frameworks to enforce standards upstream **. Similarly, the Responsible Minerals Initiative’s flagship RMAP audit program (originally for conflict minerals) expanded to cover cobalt refiners and other battery-related smelters, providing a mechanism for suppliers to be validated as conformant with OECD due diligence guidance. By late 2024, many automakers required suppliers of cobalt, 3TG, and other high-risk minerals to show RMI/RMAP or equivalent audit credentials as a condition of business . In sum, as 2024 drew to a close, the battery industry was moving from ad-hoc CSR efforts to more systematic due diligence – propelled by regulatory mandates and supported by collaborative initiatives – to ensure that the clean energy revolution’s supply chain is built on ethically and sustainably sourced foundations.
Sources: European Commission; Reuters; SLR Consulting; RCS Global; Global Battery Alliance; Responsible Minerals Initiative; London Metal Exchange; International Energy Agency; CATL news release; Korea MOLIT; U.S. Dept. of Treasury; Mining.com.
