Industry News

SHU Illustrates Risk of Forced Labor in Bifurcated Supply

Aug. 8, 2023
By: Pietro N. Bianchi

Researchers at Sheffield Hallam University (SHU) published an academic report on the solar industry’s reliance on forced labor from China’s Xinjiang Uyghur Autonomous Region (XUAR) for the inputs needed to create solar modules (i.e. quartz - metallurgical grade silicon - polysilicon). SHU has been at the forefront of reporting on forced labor, which we have discussed in the past here, here, here, and here. Importers from any industry worried about supply chain management will find this latest report on the solar industry’s reliance on inputs from Chinese forced labor a worthwhile read.

SHU explained how solar module suppliers and manufacturers claim to have split their supply chains to create product lines for the U.S. and product lines for other markets. The idea is that product lines destined for the U.S. will be forced-labor- and XUAR-input-free, while product lines destined for other markets may still source inputs produced in the XUAR or from forced-labor. The report emphasized that it is “clear” many solar modules sold in international markets are exposed to forced labor.

SHU called it “sometimes impossible” to verify whether a bifurcated product line destined for the U.S. is free of inputs made in the XUAR or from forced labor. SHU attributed the inability verify forced labor in bifurcated product lines to an industry-wide lack of transparency in most upstream segments of the supply chain, that many companies still source from suppliers with exposure to the XUAR or forced labor (presumably for the product lines destined for international markets), and that many companies have not disclosed “sufficient supply chain information” to prove bifurcation claims.

The report found that sourcing inputs from the XUAR decreased by 10 percent between 2020 and 2022, indicating that efforts to remove forced labor from supply chains are working. However, SHU’s report warns that bifurcated supply lines both create compliance complications and pose difficulties to governments, developers, and consumers. The report, which desires “a more just transition” toward renewable energy, indicates that bifurcation may seem like a step in the right direction, but poses more harm than good.

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