Sheffield Issues Guide for the Solar or EV Battery Sectors

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Jan. 30, 2024
By: Ashley J. Bodden

It has been evident for some time that Customs views the various publications from Sheffield Hallam University (SHU) and Partners as enforcement guides regarding forced labor issues. This makes each new publication by SHU relevant for importers concerned about forced labor. Based on SHU’s most recent publication the renewable energy sector is front and center.

This latest guide is styled as a joint investor guide to mitigate Uyghar forced labor risk in the renewable energy sector. The report provides investors with suggested tools to identify business linked to human right violations against the Uyghur people; exclude business from their green energy portfolios; and prioritize investments that champion sustainability, innovation and supply chain resilience. Historically, we have seen Customs utilize very similar tools in their analysis.

According to the guide, 35% of the world’s solar-grade polysilicon, used in most solar panels, is produced in the Xinjiang Uyghur Autonomous Region (XUAR) which exposes investors and other businesses to the rebuttable presumption that forced labor was used under U.S. law.

Key due diligence steps suggested by SHU include:

·       Prioritize mapping the materials or inputs known to be at highest risk of forced labor. For solar, this includes polysilicon and metallurgical-grade silicon. For electric vehicles, this includes lithium, lithium-ion batteries, copper, and graphite, as well as ultra-low-carbon steel and aluminum.

·       Track companies that have been exposed in the media for using Uyghur forced labor.

·       Map the goods the Chinese Government has prioritized for expansion.

·       Review corporate annual reports to identify a company’s top supplier.

·       Invest in expertise and resources to learn the local language names of companies (including parent companies and subsidiaries).

·       Research corporate annual reports for suppliers all the way to the raw materials if possible.

·       Search the internet in English and the company’s local language for corporate press releases or media announcements about supply contracts.

·       Search the internet for all suppliers and sub-suppliers’ relationships to state-sponsored labor programs.

The report notes that since 2022, the EV sector has increased processing and manufacturing in the XUAR, so the issue is becoming more relevant for importers and investors, rather than less relevant. Since neither ignorance of the use of forced labor nor a mistaken belief that the supply chain is free of forced labor is a defense under U.S. law, it is very important to focus on due diligence in this area.

If you have questions about forced labor or supply chain risk management do not hesitate to contact an attorney at Barnes Richardson, & Colburn LLP.