US Manufacturer Flags Forced Labor At Own Fab

• First Solar's Sustainability Report 2023 lists instances of forced labor at its Malaysia fab  
• The management says it rectified the same after 4 onsite service providers were found guilty  
• The company highlights that the information is aimed at stressing the importance of independent third-party social audit for solar firms 

Citing the results of an independent 3rd party social audit, American solar module producer First Solar has revealed instances of forced labor at its Malaysia manufacturing facility.  

It says the audits found that 4 onsite service providers in Malaysia employed migrant workers who were subjected to unethical recruitment practices, including payment of recruitment fee in their home countries, passport retention and unlawful retention of wages. Employment terms were also not communicated in native language to the workers.   

First Solar says its intervention led to all passports being returned to the workers along with disbursement of unlawfully retained wages. It claims to have also updated site service agreements to prevent any recurrence, along with developing a reimbursement plan to have the recruitment fee paid back to both the current and former workers.   

Additionally, the auditors also found working hours of employees exceeding 60 hours/week due to voluntary overtime. The manufacturer says a monitoring report to track weekly hours of work to ensure hours worked in a week do not exceed 60 hours and workers get at least a day off in every 7 days.  

First Solar's revelations come at a time when accusations of forced labor practices in China's Xinjiang led to the US passing the Uyghur Forced Labor Prevention Act (UFLPA), to ensure no products produced using forced labor enter the country (see UFLPA Comes Into Force In The US).   

It makes these revelations in the company's Sustainability Report 2023 wherein it states, "We highlight this information openly, not only because of our commitment to transparency and Responsible Solar, but also 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." 

The management further stressed the importance of independent audits, saying that 'symbolic pledges and self-defined and -governed 'protocols' and 'initiatives' lack real accountability'.  

Philip Shen of ROTH MKM believes while these disclosures by First Solar could shine a light on the rest of the industry in Southeast Asia, it will ultimately benefit the manufacturer to effectively keep prices high. Citing a former Customs and Border Protection (CBP) lawyer Elise Shibles, he said First Solar's Malaysian modules may not be covered by the UFLPA since it has no nexus to Xinjiang.   

However, these modules may be subject to Withhold Release Order (WRO) of the CBP only if the latter has reason to believe so.  

According to First Solar, "While the protocols developed by the solar industry trade associations may benefit certain manufacturers by allowing the bifurcation of supply chains and avoiding crucial aspects, such as credible onsite social audits and grievance mechanisms, working with the RBA (Responsible Business Alliance) gives First Solar access to a robust assessment methodology that can withstand the highest levels of scrutiny." 

In April 2021, the US Solar Energy Industries Association (SEIA) readied a Solar Supply Chain Traceability Protocol 1.0 Industry Guidance to recommend policies and procedures to increase supply chain transparency by equipment manufacturers and US importers (see SEIA Releases Tool For Supply Chain Transparency).  

First Solar's full Sustainability Report 2023 is available on its website.