On 24th June 2021 the US Government announced a set of far reaching measures. All target the solar energy supply chain in the Chinese province of Xinjiang and are imposed based on credible evidence of the use of forced labour (a form of modern slavery). Specifically the US:
- Added all polysilicon manufactured in China to the Department of Labor List of Goods Produced by Child Labor or Forced Labor. Polysilicon is a key component in most photovoltaic (PV) solar panels and China is by far the largest producer, accounting for 40% of global production.*
- Imposed sanctions on five Chinese polysilicon manufacturers, including subsidiaries of three of the world’s six largest producers. The sanctions are extensive, include a prohibition on the export of US technology to them, and are imposed because the companies allegedly use forced labour.
- Barred the import of silica based products to the US made by Hoshine Silicon Industry Co., Ltd., a company located in Xinjiang, and its subsidiaries.
We make the following recommendations to all organisations, not just those doing business in the US.
Recommended actions for companies procuring PV panels or other polysilicon goods
Any company procuring solar panels or other polysilicon goods should, as a matter of urgency, consult with their suppliers to determine place of origin. Any solar panels or polysilicon goods sourced from China should be prioritised for enhanced modern slavery due diligence.
The alleged forced labour programme in Xinjiang is state orchestrated, it is therefore improbable that your company has sufficient leverage to change employment practices at a given supplier in that region. It may be necessary therefore, where possible, to terminate outstanding orders and prohibit purchases from the region in the future.
Recommended actions for all other companies
The US measures are based on credible evidence of widespread forced labour in the world’s solar panel manufacturing hub.
Solar accounted for 40% of new electricity generation capacity installed in 2021. There is therefore a risk that your company’s power supplier is purchasing solar panels containing Chinese polysilicon.
We recommend that you ask your energy supplier whether they have conducted due diligence on their solar supply chain for modern slavery, including for PV panels containing Chinese manufactured polysilicon. If they fail to respond or fail to demonstrate adequate due diligence, consider changing suppliers.
For further information on alleged forced labour in Xinjiang, see our previous advisory here.
About RightsDD: RightsDD are the business & modern slavery specialists. We provide technology, training and consulting to help you identify, address and monitor modern slavery risk in your operations and supply chains. Our award winning due diligence platform, RightsDDact, helps you assess and monitor suppliers at scale. Learn more about it here.