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US solar industry launches supply chain transparency guidelines

Out-Law News | 04 May 2021 | 9:14 am | 2 min. read

Guidance to assist US solar energy developers and solar panel suppliers in preventing human rights abuses in their supply chains has been published by a leading industry body.

The US Solar Energy Industries Association (SEIA) Traceability Protocol is the first dedicated supply chain transparency guidance for the solar energy sector. It sets out a series of recommended policies and procedures designed to identify the source of materials used in solar products, such as polysilicon, and to trace the movement of these materials throughout the supply chain.

Solar Energy UK recently announced that it was working to develop a similar protocol following engagement with SEIA, the Global Solar Council and SolarPower Europe. It has published a statement condemning any human rights abuses taking place anywhere in the global solar energy supply chain, which has been co-signed by the UK’s leading solar energy companies.

Tom Stocker

Partner

Solar and renewables sector supply chains are going to face increased scrutiny going forward, and there will be pressure on the sector to self-police.

International sanctions expert Tom Stocker of Pinsent Masons, the law firm behind Out-Law, said: “It is clear that solar and renewables sector supply chains are going to face increased scrutiny going forward, and there will be pressure on the sector to self-police”.

“Manufacturers, suppliers and distributors should take heed of the SEIA Protocol and put in place modern slavery preventative measures to address this risk and to reassure their customers. Solar and renewable energy businesses and their first tier suppliers should also consider the protocol, refine their supply chain due diligence processes in light of it and factor in these developments to their annual modern slavery statements, many of which will be due for publishing shortly,” he said.

SEIA said it had developed the protocol in response to the identification by the US government of forced labour as an “area of concern” for the solar supply chain, as well as increasing consumer pressure for sustainability, environmental and socially responsible commitments from the manufacturers of the products that they purchase.

The protocol sets out a series of steps that manufacturers should take to track the origin of source materials at specified stages in the production, processing and distribution processes – for example, the factory location and production date of polysilicon used in a finished solar module. They should also be able to provide details of controls taken to prevent forced labour and other compliance risks in their supply chains such as their compliance programme, supplier due diligence processes, third party audits and employee training.

The protocol also incorporates an independent third-party audit mechanism to measure implementation.

In the UK, manufacturers are under no legal duties to prevent forced labour or modern slavery in their supply chains. However, under the 2015 Modern Slavery Act, companies and corporate groups that carry on a business or part of a business in the UK providing goods and services, with an annual turnover of more than £36 million, are required to prepare and publish an annual statement setting out the steps that they have taken during the financial year to ensure that slavery and human trafficking are not taking place in their own business or in their supply chains.

The UK government recently launched a central registry of modern slavery statements, designed to make it easier for consumers and investors to search for statements and to compare the actions that businesses subject to the requirements are taking to identify and address the risks of modern slavery in their operations and supply chains. Publication in the registry is currently voluntary, but the government intends to legislate for mandatory reporting under other planned changes to strengthen the regime.