KPMG and Circulor partner to meet growing demand for digital battery passports

The global professional services firm KPMG and Circulor, a leading supply chain traceability solution, announced a new alliance to offer a complete package that enables customers to trace, monitor and control critical raw materials throughout their battery and other industrial value chains, from extraction to the end of a product’s “first life” and beyond.

Circulor’s “digital battery passport” solution is an enabler of a sustainable, responsible, and circular battery value chain and designed for full compliance with forthcoming EU regulatory requirements. The software tracks the physical flow of critical raw materials throughout the product life cycle, capturing key sustainability and product data and facilitating recovery and recycling efforts. Circulor’s approach can also support the automotive industry in proving the requirements of the US Clean Vehicle Tax Credit.

The new alliance comes as global competition is sharply increasing for access to critical raw materials such as lithium, cobalt, nickel and graphite. These materials, which are crucial components in digital and low-carbon technologies, are linked to social and environmental concerns during extraction and processing. With global demand rising, many companies are seeking closer control over opaque supply chains and to boost recycling efforts to secure supplies and deliver on sustainability goals.

Founded in 2017, Circulor offers a mature, proven, and complete software solution to track the physical flow of materials from extraction to final product and through in-life and circular value chains. Circulor attributes to the product itself environmental, social, and governance (ESG) qualifications, Scope 1, 2, and 3 emissions, and other data inputs necessary for the EU Battery Regulation and US Clean Vehicle Tax Credit.

The KPMG and Circulor alliance will expand beyond batteries to digital product passports and identifiers, supporting customers across industries to demonstrate responsible production and gain a competitive advantage.

The EU Battery Regulation was provisionally agreed in December 2022 and is due to enter into force in 2023. It sets a range of sustainability requirements for batteries placed on the EU market, including the requirement that each battery above a minimum threshold should be accompanied with a digital battery passport. Digital product passports will increasingly be required by EU regulations in other products too, including textiles, electronics and construction materials.

The US Clean Vehicle Tax Credit, part of the Inflation Reduction Act, delivers as much as $7,500 in consumer savings with proof that an electric vehicle fulfils requirements that certain percentages of critical minerals and battery components within the vehicle have been extracted, processed, manufactured and/or recycled in North America and within US Free Trade Agreement countries. More detailed tracking will be required in 1 January 2025, in parallel with the credit’s full expansion of its Foreign Entity of Concern provision.

Circulor is an alliance partner of KPMG in Sweden.

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