What Does Supply Chain Due Diligence Mean?
Supply chain due diligence refers to the obligation for economic operators to systematically identify, assess, and mitigate risks in their supply chains. In the context of battery production, this primarily concerns risks related to human rights, working conditions, environmental standards, and conflict minerals.
The relevance for the battery industry is particularly high because key raw materials such as cobalt, lithium, and nickel frequently originate from regions where human rights violations, child labor, or significant environmental damage have been documented. Around 70 percent of globally mined cobalt comes from the Democratic Republic of Congo (DRC) — a region where severe abuses, particularly in artisanal small-scale mining, are well-known.
Due diligence is not a new concept. It builds on established frameworks, particularly the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals and the EU Conflict Minerals Regulation (EU 2017/821). The EU Battery Regulation now applies these principles specifically to the battery market and links them to the digital battery passport.
Legal Framework
The legal basis for supply chain due diligence in the battery sector comprises several complementary regulatory frameworks:
- EU Battery Regulation Art. 48–52: These articles define the specific due diligence obligations for economic operators placing batteries on the EU market. They reference the OECD Due Diligence Guidance and Annex X of the regulation, which lists the applicable OECD standards. The obligations apply to manufacturers, importers, and authorized representatives.
- OECD Due Diligence Guidance: The reference framework on which the EU Battery Regulation requirements are based. It defines a five-step process for due diligence (see next section) and is internationally recognized as the standard.
- EU Corporate Sustainability Due Diligence Directive (CSDDD): The European supply chain directive supplements the battery-specific requirements with broader corporate due diligence obligations. Large companies must examine their entire value chain for human rights and environmental risks.
- German Supply Chain Due Diligence Act (LkSG): The German supply chain law, which has applied since 2023 to companies with more than 1,000 employees, also requires systematic risk analysis and preventive measures across the supply chain. It overlaps substantively with the EU Battery Regulation requirements.
For battery manufacturers, this interplay creates a clear obligation to act: you must systematically analyze your raw material supply chains, document risks, and implement countermeasures. The results feed into the battery passport. The EU Battery Regulation sets binding deadlines for this.
Which Raw Materials are Affected?
Due diligence obligations apply to all raw materials used in battery production. Those under particular scrutiny include:
- Cobalt: By far the most critical raw material. The primary producing country is the Democratic Republic of Congo, where child labor, unsafe working conditions, and health hazards are documented in artisanal mining. Approximately 15 to 20 percent of Congolese cobalt production originates from artisanal mining.
- Lithium: Extraction in the so-called lithium triangle (Chile, Argentina, Bolivia) is associated with high water consumption in already arid regions and conflicts with indigenous communities. In Australia, lithium is extracted through hard-rock mining, which carries different environmental impacts.
- Nickel: Particularly in Indonesia — the world's largest nickel producer — deforestation of rainforest for new mining areas and high emissions from processing (HPAL process) have been documented.
- Natural graphite: China dominates global graphite production. Reports of inadequate working conditions and environmental pollution from dust emissions and water contamination are recurring.
- Manganese: Mined primarily in South Africa and Gabon, where environmental impacts and health risks for mine workers exist.
- Others: Copper for electrical conductors, rare earth elements in certain battery applications, and aluminum for casings and current collectors are also subject to due diligence obligations.
The Five Steps of Due Diligence
The OECD Due Diligence Guidance defines a five-step process that the EU Battery Regulation adopts as a binding framework:
Step 1: Establish management systems
Establish an internal due diligence policy that clearly describes how your company implements supply chain due diligence obligations. Assign responsibilities — ideally at management or board level. Integrate due diligence requirements into existing procurement and supplier management processes and ensure sufficient resources (personnel, budget, tools) are available.
Step 2: Identify risks
Map your supply chain as far as possible — from your direct suppliers (Tier 1) through their upstream suppliers (Tier 2) to raw material sources. Identify high-risk areas, suppliers, and materials. Use publicly available risk lists, industry initiatives, and supplier-specific assessments for this purpose. Document identified risks systematically.
Step 3: Mitigate risks
Develop concrete strategies to mitigate identified risks. This may include incorporating due diligence clauses in supplier contracts, conducting supplier audits, participating in industry initiatives, or — in extreme cases — switching to alternative suppliers. Document all measures taken and their effectiveness.
Step 4: Independent verification
Have the effectiveness of your due diligence measures verified by independent third parties (third-party audit). The audit typically includes assessment of your management systems, spot checks of supplier relationships, and verification of documented measures. The results of the independent audit are documented in the battery passport.
Step 5: Reporting
Publish the results of your due diligence in an annual report. This report must be publicly accessible and cover identified risks, measures taken, and results of independent verification. The reporting obligation creates transparency for regulatory authorities, business partners, and the public.
Documentation in the Battery Passport
Supply chain due diligence is anchored as Category 4 in DIN SPEC 99100 (Section 6.4). In the digital battery passport, the due diligence results are stored in a structured format — as an integral part of the complete dataset for each individual battery.
The key data fields include:
- Due diligence policy reference: Link or reference to the company's internal due diligence policy.
- Third-party audit results: Summary of independent audit findings — including audit date, auditing institution, and key observations.
- Identified risk areas: Documentation of supply chain areas classified as high-risk — specifying affected raw materials and sourcing regions.
- Measures taken: Overview of risk mitigation measures — from contractual agreements to supplier audits.
The connection between physical supply chain documentation and the digital battery passport is central: the due diligence data in the battery passport references the underlying reports and audits without duplicating their entire content. This creates a traceable path from the raw material source to the finished product.
Practical Implementation
Implementing due diligence obligations requires a systematic approach. The following steps have proven effective in practice:
- Start supply chain mapping: Begin with a complete inventory of your Tier 1 suppliers and identify critical Tier 2 suppliers — particularly for cobalt, lithium, nickel, and graphite. In many companies, this mapping already partially exists as part of existing supplier management.
- Use standardized questionnaires: Rely on industry-standard questionnaires for supplier assessment — such as templates from the Responsible Minerals Initiative (RMI) or the Global Battery Alliance (GBA). Standardized formats facilitate evaluation and comparability.
- Join industry initiatives: Individual companies can rarely trace the supply chain all the way back to the raw material source on their own. Industry initiatives such as the Responsible Minerals Initiative, the Initiative for Responsible Mining Assurance (IRMA), or the Global Battery Alliance offer collaborative approaches, shared audits, and pooled data.
- Document with software support: Systematic capture, management, and documentation of due diligence data is significantly easier with specialized software. DPP Hero maps the due diligence requirements as Step 4 of the 7-step editor — with structured input fields for policies, audit results, and risk areas according to DIN SPEC 99100.
- Continuously improve: Due diligence is not a one-time exercise but an ongoing process. Update your risk analyses regularly, respond to changed supply chain conditions, and document progress.
FAQ
Do I have to trace all suppliers back to the mine?
The EU Battery Regulation requires you to trace your supply chain as far as possible and reasonable — not just your direct suppliers (Tier 1), but also their upstream suppliers. Complete traceability to the individual mine is often not feasible in practice, particularly for raw materials traded through intermediaries and smelters. What matters is that you have established a reasonable and documented process and actively address known risks. Participation in recognized industry initiatives can serve as evidence of due diligence.
What happens if a supplier does not cooperate?
If a supplier fails to provide sufficient information about their due diligence practices despite repeated requests, you must escalate the risk. This may initially involve intensified communication and specific deadlines. If the supplier remains uncooperative, you should classify this as an elevated risk and note it accordingly in your documentation. In extreme cases, a supplier change may become necessary. Document all steps — the traceability of your approach is critical for regulatory authorities and auditors.
How often must due diligence be performed?
Due diligence is an ongoing process, not a one-time project. The risk analysis must be updated at least annually, and results must be published in an annual public report. In addition, event-driven reviews should occur — for example, when changing suppliers, when new risks become known, or when significant changes occur in the supply chain. The independent third-party audit must be repeated at regular intervals in accordance with the EU Battery Regulation requirements.