Friday Jan 27, 2023

Solar imports set for scrutiny as EU takes aim at human rights in supply chains – S&P Global

Technicians at a factory in China’s Hebei province make the final preparations of solar cells. EU lawmakers are working on requirements for companies to map out sustainability and workers’ rights issues in their import supply chains.
Source: Kevin Frayer/Getty Images AsiaPac via Getty Images

EU lawmakers will this week lay out the first steps toward an import ban on products made globally using forced labor, after the United States issued a de facto ban on imports from the Chinese region of Xinjiang, a hub for global solar panel production, due to alleged human rights violations.

The imports plan will be brought in alongside new reporting requirements known as the Sustainable Corporate Governance directive, which will force companies to map out sustainability and workers’ rights issues in their import supply chains, and engage with suppliers to improve practices.

The due diligence directive will require documentation on environmental impacts and human rights, including forced labor. In forced labor, persons are coerced to work through the use of violence or intimidation, or by more subtle means such as manipulated debt, retention of identity papers or threats of denunciation to immigration authorities.

“We need to address goods made by forced labor no matter where they are made, in the EU or elsewhere,” a European Commission spokesperson said Feb. 18. “The commission is now working on the ways to introduce such a prohibition.”

While the corporate governance directive will apply to all sectors and all countries, it will require companies in Europe’s solar industry to ratchet up their attention on alleged forced labor in China. Much of the world’s solar panel manufacturing capacity is based there and ties to the autonomous Xinjiang region are omnipresent in various nodes of the complex supply chain.

The U.S. government has said it found evidence of labor abuses in Xinjiang’s solar industry, and in December 2021, President Joe Biden signed into law the Uyghur Forced Labor Prevention Act, which will ban goods from China’s Xinjiang region unless importers can document that their products were not made with forced labor.

A spokesperson for the Chinese Mission to the EU said Feb. 21 that the accusation of forced labor in Xinjiang has “no factual basis and is a lie fabricated by anti-China forces.”

“In proposing initiatives, [the EU] should adopt free, open and non-discriminatory market principles, provide a fair and just business environment for companies of all countries, and avoid unnecessary impacts on global industrial and supply chains,” the spokesperson said.

Clarity on the EU’s approach to restrictions is set to come Feb. 23 when the commission adopts its Communication on Decent Work Worldwide, together with the due diligence directive.

‘Game changer’ for human rights

In 2020, 75% of all imports of panels into the EU came from China, according to Eurostat, the EU’s statistics agency.

“If you were to decide in February 2022 that you want to suddenly buy from crystalline solar companies that have nothing to do with Xinjiang you would have almost no choice,” said Paul Wormser, vice president of technology at Clean Energy Associates, a global technical advisory focused on solar and storage. The trade restrictions in the U.S. …….


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