How can private equity asset managers accelerate adaptation in the battery manufacturing sector?

How can asset managers adapt to those risks?

At Altitude, we combine science-based analysis with deep insights into transition and nature-related risks. Based on our findings, we have identified several adaptation measures to capitalize on emerging opportunities and mitigate risks to asset managers’ portfolios. This list is illustrative, not exhaustive.

• Diversifying supply chains:
  • Long-term supply agreements and strategic alliances with mining firms are supported to strengthen raw material security.
  • Preference is given to firms investing in environmentally responsible extraction methods. Transparency is encouraged, for instance through participation in the Responsible Minerals Initiative (RMI) Network, which provides tools and resources to improve regulatory compliance and support responsible sourcing of minerals from conflict-affected and high-risk areas.
  • Investments in recycling and circular supply chains are encouraged to reduce dependency on raw materials and foster circularity, including the promotion of battery reuse, repurposing, and advanced recycling technologies that extend battery lifecycles and reduce waste.

• Supporting decarbonization: low-carbon production is supported by backing companies implementing carbon management strategies, such as carbon offset programs and credits, and those using energy recovery systems to lower GHG emissions during manufacturing.
• Regulatory alignment: compliance is prioritized by favoring businesses with robust monitoring systems that track evolving regulations on hazardous substances and recycling mandates. Proactive compliance with evolving regulations – like the upcoming EU Battery Regulation – enables agile adaptation to policy changes.
• R&D and innovation encouragement: through capital allocation toward R&D-intensive battery firms developing next-generation technologies (e.g., solid-state batteries, lithium iron phosphate (LFP) batteries, or alternative chemistries such as sodium-ion), which may offer higher performance with fewer regulatory burdens.
• ESG integration: is evaluated by investing in companies actively shaping industry-wide sustainability benchmarks and low-emission protocols, thereby strengthening market credibility and supporting long-term positioning.
• Growth markets are explored: by identifying and investing in companies targeting high-growth segments such as stationary energy storage or electric mobility, particularly in regions with subsidies or favorable policy environments.
• Biodiversity impact assessments: are conducted to evaluate portfolio dependencies and pressures on biodiversity. The LEAP framework developed by the Taskforce on Nature-related Financial Disclosures (TNFD) can be leveraged for nature-related issues. The development of such approaches helps reduce environmental pressures and foster biodiversity preservation.

Adaptation: a strategic opportunity for asset managers?

For private equity investors in battery manufacturing, adapting to transition and nature-related risks is not just about compliance. It’s about safeguarding returns and capturing emerging market opportunities. Investors who proactively support sustainable practices and innovation position their portfolios to benefit from regulatory incentives, consumer preferences, and technological breakthroughs. Effective adaptation enables investors to manage risk, enhance value creation, and ensure long-term resilience in a rapid evolving landscape. Adaptation presents a complex challenge for the private equity sector. To gain a deeper understanding, refer to our White Paper “Éviter l’ingérable en s’adaptant à l’inévitable” (in French, English version to come soon), crafted specifically for investors and corporates, offering key insights on effectively navigating the adaptation process.

The full paper is available for download here: Éviter l’ingérable en s’adaptant à l’inévitable (in French only, English version coming soon).