Obligations not to be underestimated for the private sector

  eco energy department | July 4, 2024

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The scope of obligations for the private sector under the law is generally limited and it repeatedly emphasizes that it is up to states to ensure the security of their supply chains. For example, the recital states that companies are not required to stockpile raw materials in case of supply chain disruptions.

However, the art. 24 CRMA explicitly addresses “business risk preparedness.” By 24 May 2025 and within 12 months of any update of the list of strategic raw materials, Member States must identify large companies operating in their territory that use strategic raw materials to produce batteries for energy storage and electric mobility, equipment related to the production and use of hydrogen, equipment related to the generation of renewable energy, aircraft, traction engines, heat pumps, equipment related to data transmission and storage, mobile electronic devices, equipment related to additive manufacturing, robotics-related equipment, drones, rocket launchers, satellites or advanced chips. Once this list is drawn up and submitted to the EU Commission, these companies will be required to carry out risk assessments at least every three years. This includes mapping their supply chains, analyzing potential spillover risks and assessing their vulnerability in the event of a disruption. If they identify significant risks, they are obliged to mitigate them, including by diversifying sources of raw materials.

This risk management obligation therefore adds to the growing number of reporting and risk management obligations that companies face under EU legislation. We have already updated you on the Corporate Sustainability Due Diligence Directive (CS3D) and the Corporate Sustainability Reporting Directive (CSRD), both of which require advanced assessment of supply chains from a human rights and environmental risk perspective. Companies must therefore comprehensively evaluate their supply chains and determine whether they are sustainable in the sense of CSRD and CS3D and safe in the sense of CRMA. This process requires a certain level of diligence. Attention to these issues is expected to grow in the coming years.