Critical minerals such as lithium, cobalt, nickel, graphite, and copper are essential for electrification and for all clean energy technologies – EV batteries, grid storage, wind turbines, and solar panels. Traceability, e.g. being able to track where these materials come from and how they are processed, supports environmental standards, responsible labour practices, circular economy efforts like recycling and reuse.,
The White Paper “Digital Product Passports and Critical Raw Materials for Batteries,” published by UNECE, highlights how different national regulations on critical raw materials (CRMs), related data privacy, security, and confidentiality can conflict with traceability and transparency across cross-border value chains for electric vehicles and renewable technologies.
The Paper focuses on the role and implementation of Digital Product Passports (DPPs) - digital tools designed to trace the lifecycle of critical raw materials from mine to recycling. It finds that major economies such as the EU, US, and China are developing DPP systems that are not interoperable. This lack of interoperability creates confusion and significant compliance costs for businesses, potentially sidelining smaller operators and developing nations.
To fulfil the need for interoperable DPPs, underlying methodologies also need to be harmonized and UNECE is developing the United Nations Transparency Protocol (UNTP). As part of the G7 Critical Minerals Action Plan, G7 leaders committed to call for the development of a global framework for interoperability of digital credentials and DPP compatibility aligned with the UNTP. Moreover, the UNECE is expected to deliver on a cradle-to-grave carbon footprint globally harmonized methodology for cars and its components that could serve as a basis for global DPPs deployment for automotive products.
The White Paper underscores that challenges vary significantly across different segments of the value chains. Upstream extraction and processing activities in countries such as Indonesia, the Democratic Republic of Congo, or Peru often raise concerns related to land use, environmental impacts, and labour conditions. Midstream processing and refining centres, particularly in major manufacturing hubs like China, the EU, Japan, and South Korea, are increasingly subject to stringent value chain due diligence requirements. Meanwhile, battery and electric vehicle manufacturers in the EU and United States must demonstrate robust transparency to regulators, financial institutions, and consumers in order to maintain market access and meet climate and sustainability objectives.
The varied categorization of CRMs leads to value chain 'forum shopping', meaning companies may move their business to countries that have the least stringent regulations. Consequently, the phenomena of ESG “free-riders” occur when the downstream consumption markets cannot distinguish what CRM products are produced by responsible sourcing. This exemplifies the importance of adopting DPPs globally but also reveals the risks in the quality of data collected in some States.
“Without addressing conflict of laws and international coordination, we risk creating a ‘Tower of Babel’ where different traceability systems cannot communicate,” said the project lead, Associate Professor Jie (Jeanne) Huang of the University of Sydney. “This fragmentation jeopardizes the transparency and traceability needed to ensure ethical sourcing and ESG standards for critical minerals like cobalt, copper, lithium, nickel, and rare earth.”
A legally interoperable traceability system creates an immutable chain of custody, allowing States to prove or verify the legitimate origin of critical raw materials, making it harder for bad actors to launder conflict minerals or illegally diverted materials through third countries.
To achieve legal interoperability in tracing critical raw materials and their products across border, the White Paper proposes a set of core principles for international coordination. These include leveraging existing international treaties and UN standards, and common applicable methodologies such as the United Nations Framework for Classification of Resources (UNFC), respecting mandatory national laws on security and privacy and ensuring support for developing countries and Small and Medium-sized Enterprises.
UNECE and UN/CEFACT can serve as neutral and technical fora to support legal interoperability across borders. In particular, UNECE’s Recommendation to Fostering Sustainable Value Chains, mineral management, and circular economy initiatives across UNECE programs provides an existing platform for cooperation across energy, transport, and trade sectors. UNECE and UN/CEFACT are also uniquely positioned to establish a new policy recommendation for establishing mutual recognition legal models in tracing digital documentation of CRMs and their products in international value chains. These initiatives have the potential to enable interoperability between different traceability systems, reduce legal uncertainty, and support cost-effective industry compliance.