What is 'due diligence' in the Battery Regulation?
Due diligence is the term used by the Battery Regulation to describe the process of examining and managing risks in the supply chain of raw materials contained in batteries, such as cobalt, lithium, nickel and natural graphite. This concerns risks in the areas of human rights, working conditions and environmental damage in the extraction and processing of those raw materials, and the question of whether a company can demonstrate that it knows those risks and is taking action on them.
For most e-bike importers, battery traders and machinery manufacturers in SMEs, this obligation is not the first thing you will encounter. The Regulation directs the due diligence obligation primarily at larger market participants who place batteries or raw materials for batteries on the EU market. The exact location of the boundary and which exemptions apply are set out in the official text on EUR-Lex; this is not an assessment we make here.
Why the concept is nevertheless relevant for smaller companies
If you purchase batteries from a manufacturer or importer who is subject to the due diligence obligation, you will notice something of it, even if you are not obliged yourself. Larger suppliers increasingly ask their own suppliers to provide data on origin and chain management, and this request can also reach you through the chain, for example if you resell or incorporate batteries into equipment yourself.
It is therefore useful to recognise the concept when a supplier or customer asks about it, so you know it is about the origin of raw materials and not about the content of the battery passport itself. Anyone who does not know this distinction risks confusing questions from different regulations.
How due diligence relates to the battery passport
The digital battery passport and due diligence are two different obligations from the same Regulation, which do touch on each other. The passport contains, among other things, data on the composition, origin and performance of a specific battery and is intended to make that information accessible throughout the chain, from trader to recycler. Due diligence goes a step earlier in the chain: it concerns the process by which a market participant assesses whether the raw materials in its products have been responsibly extracted and processed.
In practice, due diligence information can ultimately feed into the data that ends up in a passport, for example when it comes to certificates of origin of raw materials. Anyone who speaks with a software supplier or service provider about setting up a passport should therefore ask which data are needed for this and from whom they will be supplied. the knowledge base with explanations per subject Set out the relevant concepts per situation, so that you can check which of them apply to your business.
What you will notice in practice
For most companies in e-bikes, light means of transport and industrial batteries, due diligence remains for now something that takes place among manufacturers and large importers higher up the chain. Nevertheless, it is wise not to assume that it will never affect you: if your role in the chain changes, for example because you start importing batteries yourself instead of only purchasing from a European supplier, your position with regard to this obligation may also change.
A good starting point is to clarify for yourself what role you play in the chain: manufacturer, importer, distributor or something else. This is because it partly determines which obligations from the Regulation apply to you, including due diligence. With the product scan that provides an initial indication in a few questions you quickly get an overview of where your company roughly stands, without having to read through the entire Regulation first.
Where you can read about this
Because due diligence is a distinct, extensive part of the regulation with its own requirements and exemptions, it is never wise to conclude on the basis of a summary whether your company falls under it. For that purpose, consult the official text of the regulation or submit your specific situation to a lawyer or the competent supervisory authority. On the page with frequently asked questions you will also find a brief answer per topic and a reference to the location in the official text.
Would you like to get a clear picture of which obligations do and do not apply to your own assortment, and how due diligence relates to the battery passport you must draw up? Do the free quick-scan or read via the explanation of where our information comes from how we collect and maintain the data for your passport.