Bridging gaps in battery supply chain transparency

Challenge

The EU Battery Regulation (EU 2023/1542) has driven both European and non-European automotive manufacturers targeting the EU market to rapidly align with its compliance requirements. For many Asian manufacturers, the challenge is compounded by a relative lack of experience and internal infrastructure to support the traceability and transparency demands now expected in the European regulatory landscape.

The client, a globally recognized automotive manufacturer based in Asia, faced a critical issue: a lack of transparency in their upstream supply chain, particularly concerning the sourcing of raw materials from mining operations. To add complexity to the project, the client did not have a formal written agreement between their business and their battery cell supplier, which allowed the supplier to refuse to disclose the supply chain details to the client. This presented a barrier to the client; without the supplied information, the client could not meet European requirements for due diligence information.

Solution

With large challenges facing them, the client selected SLR to support this project due to its proven expertise in responsible sourcing audits and its ability to operate as a second-party auditor, while helping the client build up their internal management ecosystem.

The client's goals for the project:

• Uncover the client’s sub-supplier information and assess them against responsible sourcing criteria
• Ensure the client’s alignment with EU regulations, which enables them to maintain their business in the European market
• Strengthen supply chain visibility to support proactive risk management
• Maintain a stable and ethical supply of critical minerals

Working with the client’s supplier as a trusted intermediary

When faced with the challenge of supplier reluctance to disclose supply chain information to the client, SLR contacted the supplier directly and worked with them to establish a formal agreement – SLR could have full visibility of the supply chain to perform the assessment, but all information, including details of the suppliers names, addresses and identifying information remained anonymous to the client. This compromise enabled the SLR to proceed with the auditing program as planned without bias or conflict of interest. And in parallel, opened a positive dialogue between the client and its suppliers to ultimately agree to disclose supply chain information without anonymization.

SLR continued to conduct the supply chain validation audits of the key suppliers to uncover sources of upstream battery raw materials and provide the client with risk assessments for each battery supply chain based on the supply chain information collected. SLR also monitored the improvement of key suppliers via the Corrective Action Plan (CAP) after the audit.

Impact

SLR helped bridge the communicative gap between the client and the supplier, ensuring that the audit process could move forward smoothly and credibly, while still meeting the objectives of the audit.

The final solution was a neutral audit framework that the client accepted and actively supported. This approach enabled:

• Direct communication and the development of a working relationship with the suppliers allowed for a complete and successful audit
• The client's increased understanding of the geographic distribution, size, and complexity of the battery supply chain and potential risks
• A baseline understanding of the supply chain, so the client may continue to prepare their full disclosure package for evolving frameworks like the EU Batteries Regulation (EUBR)

While specific metrics remain confidential, the client expressed high satisfaction with the outcome. The project demonstrated how SLR’s neutrality and expertise can de-risk complex supplier relationships and support long-term compliance with responsible sourcing regulations.