Insights 2024.12.16

Human rights and environmental due diligence in EU Battery Regulation 2. What are the due diligence requirements for battery businesses in the European market?

table of contents

Zeroboard Inc.
Taku Nozoko, General Manager of the Solutions Development Department, Sales Division

This book details practical steps that companies should take to comply with the human rights and environmental due diligence (DD) requirements of the EU Battery Regulation , which will come into effect on August 18, 2025. It explains how to assess risk based on the regulation, ensure supply chain transparency, and share the necessary data. In particular, it touches on how to gather the information required to Create a DD report, how to collaborate with suppliers, and how to protect trade secrets. This book provides a detailed interpretation of DD compliance, which is essential for future business operations, from an expert perspective.

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1. Businesses that qualify for DD

This chapter explains which businesses are subject to due diligence (DD) under Chapter 7 of the EU Battery Regulation. The regulation applies to companies with net sales of 40 million euros or more in the previous fiscal year, and also explains the scope of application by battery product Category. In particular, we explain how the requirements for subject businesses are defined in preparation for the requirement that DD be required for all battery Category, which will come into effect on August 18, 2025.

2. Supply chain and risk items subject to reporting in DD

This chapter provides a detailed explanation of the supply chains and risk issues that require due diligence reporting in accordance with Chapter 7 of the EU Battery Regulation. The regulation requires the identification of raw materials related to battery Manufacturing and the associated social and environmental risks. It also covers the systems required to ensure supply chain transparency and how to operate them.

3. How to proceed with human rights and environmental due diligence

This chapter introduces the steps that companies can take to implement human rights and environmental due diligence. With reference to OECD guidance and the Japanese Ministry of Justice's "Business and Human Rights," the book provides a detailed explanation of how to proceed with risk assessment. In particular, it explains the difference between "initial investigation" and "detailed investigation" at the supply chain risk investigation stage, and the information gathering methods required for each.

4. Information that is essential for cooperation within the supply chain and information that is recommended for cooperation

This chapter summarizes which information is mandatory to be shared among business operators in the supply chain during the due diligence process, and which information is recommended. Based on the EU Battery Regulation, it shows the information items required for risk assessment and details of the information to be provided by suppliers. In particular, it clarifies the points where different information is required at the initial investigation and detailed investigation stages.

5. Possible information sharing between businesses

This chapter focuses on how information should be shared within the supply chain. In terms of due diligence, it explains how suppliers should share their own due diligence reports with economic operators, and the system for information sharing all the way back to the most upstream supplier. It also shows the specific information that suppliers should provide and how to utilize that information.

6. Guaranteeing trade secrets in data sharing

This chapter explains how to conduct data integration while protecting trade secrets that may be contained in data provided by suppliers. It explains what information is essential to ensure information transparency and what information should be abstracted or pseudonymized to maintain confidentiality. It also touches on the role of information verification by a third-party verification organization.

7. Conclusion

The final chapter summarizes the Issue companies face and their solutions as the deadline for human rights and environmental due diligence under the EU Battery Regulation approaches. It also introduces how companies should prepare for the implementation of the regulation, as well as the consulting Service and collaboration platform that we provide. In particular, we provide the latest information on the development of supplier questionnaires and self-assessments (SAQs).

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*1)Source: EU Battery Regulation: https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32023R1542
*2)Source: OECD Guidance: https://mneguidelines.oecd.org/OECD-Due-Diligence-Guidance-for-RBC-Japanese.pdf
*3)Source: "Business and Human Rights" Response, detailed version: https://www.moj.go.jp/content/001417137.pdf
*4)Source: "Published initiatives" website: https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives_en?text=battery

Article author

Taku Nozoko (General Manager of the Solutions Development Department, Sales Division)
After working in business and IT consulting Service at MUFG Bank, Ltd. Research and Consulting Company , he participated in the launch of Zeroboard in 2021. While working, he enrolled in the Graduate School of Environment and Information Studies at Yokohama National University to study and research LCA environmental assessment methods. With a background in environmental information studies, he is in charge of business development and as a consultant at Zeroboard , managing the demonstration project for the "CFP Guidelines" by the Ministry of Economy, Trade and Industry and the Ministry of the Environment, and leading the development project for the Ouranos Ecosystem's app requirements (CFP calculation and collaboration) in collaboration with DADC and ABtC. Most recently, he has been providing consulting Service related to CFP and DD compliance support and CBAM compliance under EU Battery Regulation . He has experience calculating CFP for over 50 products (20 of which are related to automobiles and automobile parts).