<p>Lithium-ion batteries play a&#xa0;crucial role in the decarbonisation of numerous sectors. The rapid growth of electromobility and the increasing deployment of battery energy storage systems underscores the urgent need for sustainable strategies to manage lithium-ion batteries. Repurposing batteries after their initial application in electric vehicles offers a&#xa0;promising approach to extend the service life of batteries, while simultaneously addressing the growing volume of retired vehicle batteries. In this study, a&#xa0;life cycle assessment was conducted, in order to evaluate the environmental performance of battery energy storage systems containing repurposed batteries (second-life battery energy storage systems). Four different repurposing scenarios were analysed, which consider the reuse of key battery components such as the module casing and the battery management system, in addition to the battery cells. The results show that second-life battery energy storage systems offer significant environmental benefits compared to systems equipped with new batteries. The highest savings are achieved when the battery cells, the module casing, and the battery management system are all reused. Compared to systems with new batteries, this strategy results in reductions of 44% in greenhouse gas emissions and 61% in metal depletion. The implementation of such strategies, however, requires adaptations in battery design practices to make them technically feasible. Circular-by-design approaches, which incorporate concepts such as repurposing already in the development phase can enhance the circularity of lithium-ion batteries and substantially improve their environmental performance over the entire life cycle.</p>