Welcome to the Circulor monthly newsletter, where, in this last update for 2023, we highlight this year’s progress toward more resilient, transparent, and responsible global supply chains.

 

It’s been a fast-paced year in terms of new market drivers that demand supply chain transparency—with no signs of progress slowing down as we move into 2024. Behind this growing global momentum is an increasingly ubiquitous understanding that for supply chains to be secure, reliable and resilient, they must also be responsible and sustainable, which, simply put, requires proof.

 

In August, Europe passed into law its EU Battery Regulation, strengthening responsibility rules for industrial and battery manufacturers, setting a global precedent for digital battery passports, and making clear that adherence to upstream environmental and due diligence requirements is the new standard for selling large batteries in Europe. Now, following close behind, the bloc has also passed its Ecodesign for Sustainable Production Regulation, applying the requirement of digital product passports to items beyond batteries, like aluminum, steel, and electronics.

 

The U.S. has used 2023 to leap ahead on supply chain transparency, especially by defining key provisions in the Inflation Reduction Act and the Bipartisan Infrastructure Legislation. Most recently and notably, U.S. Departments of Energy and Treasury have defined what constitutes a Foreign Entity of Concern within battery supply chains. Informed by other global precedents, as well as Circulor’s technical capabilities, the U.S. made clear this month that “physical tracing” is required to prove compliance with these definitions and provide the granular data needed for U.S. officials and American EV buyers. 

 

Such initiatives within markets, including similar efforts in India, South Korea, Japan, Canada and others, are boiling up to the global stage. At last week's UN Climate Conference, COP28 in Dubai, UN Secretary-General António Guterres emphasized that the extraction of green energy materials must be “sustainable and just” and announced the establishment of The Panel on the Critical Energy Transition Minerals to provide global guidance and common principles that can manage the energy transition, while also managing the geopolitical and sustainability challenges expected to ensue. 

 

In a complimentary fashion, the International Energy Agency delivered a similar message in its inaugural critical minerals report last week— “Sustainable and Responsible Critical Minerals Supply Chains.” The report stresses that clean energy supply chains are only reliable and resilient when also responsible and sustainable and calls specifically for “making critical mineral supply chains transparent” and continuously “tracking and monitoring performance.” 

 

Market drivers don’t just come from governments and intergovernmental agencies. Industry holds similar power to set new standards, and that’s what we’ve seen in the recent announcement between the world’s second largest lithium provider SQM, Volvo Cars, and Circulor. The three companies confirmed end-to-end traceability of SQM’s IRMA 75 audited lithium, an industry first that differentiates SQM’s lithium as the most sustainable lithium and its incorporation into specific battery cells and packs downstream. Read more from SQM, Volvo Cars, and Circulor here. 

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The beauty of supply chain transparency, material traceability, and digital identifiers is that in a world with layering issues that require attention, 2023 tells us there is coalescence around the fact that transparency solves for a myriad—greater economic, climate, and market resilience—and that on the back of that, 2024 is poised to be an even bigger year of progress.

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Finally, ‘Season’s Greetings’ from Circulor. We wish you joyous holidays and a very Happy New Year! We look forward to continuing to bring you these global insights here and on circulor.com and LinkedIn. More on the latest global traceability trends below.