The shift from a “take–make–dispose” economy to a circular model depends on two pillars: traceability and finance. In sectors like battery manufacturing, electronics, and energy storage, supply chains are global and capital-intensive. Without visibility into material flows and access to green funding, firms struggle to align sustainability with business goals.
At BASE Project, traceability tools like Digital Product Passports (DPPs) and Digital Battery Passports (DBPs) are essential infrastructures. These systems help make supply chains transparent, auditable, and capable of unlocking both environmental and financial value under Europe’s evolving regulatory landscape.
Traceability: The Foundation of Circular Supply Chains
Traceability gives companies the ability to follow materials from mine to end-of-life. For battery value chains dealing in lithium, cobalt, and nickel, accurate data on origin, composition, and environmental footprint is essential.
This level of insight enables compliance with human rights and environmental standards, supports efficient resource recovery, and strengthens ESG reporting. Under the EU Battery Regulation, traceability through DBPs helps manufacturers demonstrate ethical sourcing, lifecycle emissions, and recycling performance. The regulation itself mandates battery traceability to enhance market surveillance and consumer transparency.
Financing the Transition: Why Investment Matters
Building a circular supply requires upfront investment. Upgrading systems, deploying traceability tools, redesigning production, and integrating digital infrastructure all have costs. Traditional loans often overlook the long-term gains of circular operations.
However, this trend is changing. Green financing instruments such as sustainability-linked loans, green bonds, and EU funding mechanisms are encouraging transitions. The European Investment Bank has prioritised circular economy projects, investing in infrastructure and technical support for companies advancing circular models.
Traceability strengthens access to this capital. When companies present verifiable data on carbon intensity, supplier practices, and recycling outcomes, investors and banks can better assess risk and reward. In this way, traceability becomes a bridge between sustainability goals and financial viability.
How Traceability Strengthens Financial Credibility
Transparent data is more than a compliance tool—it becomes a signal of trust and accountability. A battery manufacturer with DBP-enabled traceability can show year-on-year improvements in emissions and recovery rates.
Lenders and investors can use this verified data to align with EU Taxonomy standards and ESG mandates. In effect, firms demonstrating strong traceability and circular metrics may secure more favourable financing terms. This dynamic turns circularity into a driver of competitiveness.
Challenges in Scaling Circular Financing and Traceability
Despite enthusiasm, several obstacles remain. Data systems are often fragmented across geographies and suppliers. Different lifecycle reporting standards make comparisons difficult.
Implementation costs are high, particularly for small and medium-sized enterprises. Many lack internal capabilities to adopt traceability technologies. In addition, financial institutions may lack experience in assessing circular business models, limiting their willingness to support them without proven metrics.
To address these challenges, collaboration is essential. Governments, industry bodies, and financial institutions must work together to establish standards, interoperable platforms, technical assistance, and inclusive funding mechanisms.
BASE Project: Pioneering Circular Traceability and Data Transparency
At BASE, we are building a Digital Battery Passport framework that bridges traceability and finance. We design systems that record every stage of a battery’s lifecycle, from raw materials through to recycling, while embedding circular metrics and carbon indicators.
Our platform leverages technologies such as blockchain and AI to verify data integrity without compromising confidentiality. This trusted digital infrastructure empowers manufacturers and recyclers to align with regulatory and investor requirements.
By piloting DBP models across diverse battery applications, we validate how traceability can support access to green financing and enable scalable circular value chains. BASE is not only responding to regulation but shaping how traceability and financing converge in sustainable industry practices.
The Way Forward: Connecting Data, Policy, and Finance
To unlock circular supply chains at scale, we must connect three domains: reliable data, supportive policy, and inclusive finance. Policymakers should provide incentives, standardised reporting rules, and capacity-building support. Financial institutions must adapt evaluation criteria to value circular metrics.
The BASE project is committed to bridging these gaps. As Europe adopts more ambitious circular and sustainability goals, we believe that traceability and financing will prove inseparable. Together, they can reshape industries to be efficient, ethical, and resilient.
The BASE project has received funding from the Horizon Europe Framework Programme (HORIZON) Research and Innovation Actions under grant agreement No. 101157200.
References:
European Commission. Regulation (EU) 2023/1542 on batteries and waste batteries: https://eur-lex.europa.eu/eli/reg/2023/1542/oj/eng
European Investment Bank. Circular Economy Guide: https://www.eib.org/en/projects/topics/energy-natural-resources/circular-economy/index
DNV (via DNV Article) “Staying charged: the evolving regulatory landscape needed for sustainable battery production”: https://www.dnv.us/article/staying-charged-the-evolving-regulatory-landscape-needed-for-sustainable-battery-production-240993/
Reuters. EU earmarks €1.8 billion for battery raw materials supply chain: https://www.reuters.com/markets/commodities/eu-earmarks-18-bln-euros-battery-raw-materials-supply-chain-2025-03-05/
European Commission - EU taxonomy for sustainable activities: https://finance.ec.europa.eu/sustainable-finance/tools-and-standards/eu-taxonomy-sustainable-activities_en
Luminia: What are ESG Mandates? Plus, How Companies Can Achieve Them: https://luminia.io/what-are-esg-mandates-plus-how-companies-can-achieve-them/#:~:text=What%20are%20ESG%20Mandates%3F