First Solar reports forced labor in supply chain

A third-party examination revealed that employees employed by four subcontractors at manufacturing sites in Malaysia were subject to unethical labor practices.

August 15, 2023 Ryan Kennedy

First Solar Series 6 Module face.

Image: First Solar

First Solar, the leading U.S. solar manufacturer of cadmium telluride thin-film solar panels, revealed that a third-party audit confirmed that migrant workers employed as janitorial and security staff at its operations in Malaysia were victims of forced labor. The audit found that four subcontractors charged workers recruitment fees and withheld pay and passports.

The company said it is requiring the facilities to improve working conditions, outlining actions taken in its 2023 sustainability report. First Solar said it will perform periodic reviews to ensure the subcontractors are not using forced labor. It will also limit work weeks at the facility to 60 hours and require workers take at least one day off every week.

Our onsite service providers have since returned all passports and unlawful wage detentions to the workers and updated their policies to prevent future fees. In addition to organizing an Responsible Business Alliance briefing session for our onsite service providers, First Solar contracted a third-party to conduct an investigation and develop a reimbursement plan. We are working with our onsite service providers to ensure the recruitment fees are paid back to both current and recent workers in accordance with RBA guidelines and best practices.

First Solar reported the activity “to raise awareness of modern slavery risks that hide in plain sight and to illustrate the value of an independent third-party social audit conducted in a credible, comprehensive manner,” said Mark Widmar, chief executive officer, First Solar.

The report highlights the increased focus on transparency in supply chains in the United States as it moves to divorce itself from unethical labor practices in the solar manufacturing sector. Enforcement of laws like the Uyghur Forced Labor Prevention Act (UFLPA) and antidumping / countervailing duty (AD/CVD) are placing increased responsibility on suppliers to show their goods are untainted by unethical practices if they want their goods to reach U.S. markets.

“What First Solar has done is the critical due diligence that all companies need to do around the world to ensure they are identifying and remediating forced labor in their supply chains,” said Laura Murphy, human rights and contemporary slavery professor, Sheffield Hallam University. “It does happen, and companies have to be on the lookout for it.”

While First Solar is not exposed to the forced labor risks in the Xinjiang region under scrutiny through the UFLPA, the findings of unethical practices in the Malaysian facility underscore the need for a thorough understanding of the origin of goods from raw material to finished component.

“The solar industry will anchor the global transition to a sustainable energy future, and we believe that it must do so responsibly,” said Widmar “Quite simply, our industry’s work to power the energy transition and enable the fight against climate change does not serve as credits to offset its social and human rights obligations.”

Despite U.S. announcing record levels of solar manufacturing capacity coming online, with over 155 GW of production capacity along the solar panel supply chain announced over the past year alone, demand is still outpacing domestic supply. The domestic content requirements to qualify for a 10% tax credit adder within the Inflation Reduction Act are further pushing demand for U.S.-made panels, and First Solar is currently booking sales as late as 2030 for its domestic products. These forces will likely require U.S. developers to continue to source non-U.S. panels for years to come, suggesting that supply chain transparency and traceability will continue to be an important focus for suppliers.

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