Solar products are increasingly at risk of being detained at ports as countries intensify efforts to halt the import of goods produced with forced labor. For example, in the United States, the Uyghur Forced Labor Prevention Act (UFLPA) has led to the seizure, export, or destruction of over $500 million worth of electronic goods at the border in the past two years.
The Solar Energy Industries Association (SEIA) has recently released the SEIA 101 standard to help companies comply with these laws. The standard, set to be published in early 2025, will provide a framework for how companies can follow the origins of solar products, starting from the raw materials all the way to the finished product. This will help companies more easily identify and end forced-labor risks in their supply chain.
Although some companies may see this standard as additional hurdles, it provides an opportunity to safeguard products. Ultimately, adhering to the standard will reduce customs-related stoppages and other disruptions, helping keep solar projects on schedule and within budget.
Adhering to the requirements outlined in SEIA 101 can help solar companies avoid compliance issues with laws such as the UFLPA and better prepare them to respond if such issues arise. As part of this process, solar companies will need to fortify their business operations and supply chain in critical areas such as:
Eliminating forced-labor risks from solar products and projects must be a deliberate effort by both solar companies and their suppliers.
They should take proper precautions, ensuring their employees and suppliers are aware of the forced-labor laws through efforts like training and communications. Companies should also update their code of ethics, contracts, and purchase orders as needed to verify their compliance with the laws. On top of that, they should identify and audit all suppliers and manufacturers in their supply chain, and cross reference them with the Sheffield Hallam University’s database of companies that operate in the Uyghur Region.
A traceability management program is also essential for identifying forced labor in a product’s supply chain and a requirement in SEIA 101. As part of this effort, solar companies should employ supply chain mapping to document the origins and journey of their products, including their components and raw materials. This mapping should offer visibility into not only the manufacturing process but also the trading, sorting, and transportation stages so that all customs inquiries can be addressed. Companies can also proactively uncover forced-labor risks using freely available resources like the International Labour Organization’s forced labor indicators and the U.S. Department of Labor’s Comply Chain tool.
Supply chain mapping should be a continuous effort, especially because forced-labor compliance requirements and lists of in-scope materials and entities often change. To prevent companies from opening themselves up to risks, they should continue to map their supply chain with regular data collection and reporting, and make sure new suppliers are subjected to the same auditing and training processes as existing suppliers. Ensuring that all suppliers follow uniform codes and compliance standards will bolster supply chain resilience and help companies identify risks promptly.
Improperly marking the country-of-origin (COO) can make a solar product stand out as an easy target for customs.
All foreign goods imported into the U.S. must include a COO marking that’s written in English in a legible and as permanent manner as possible. The markings must be clear and conspicuously placed on the product. However, certain items like electronics have a different marking requirement. Adhering to these regulations—and avoiding common errors like using abbreviations or placing the markings in less visible locations—can minimize the risk of products facing issues at U.S. Customs.
International Commercial Terms, or Incoterms, are internationally recognized terms and stipulations that define a buyer’s and seller’s responsibilities in a trade contract.
The terms were created by the International Chamber of Commerce (ICC) and have been published in 29 languages. The latest Incoterms edition, Incoterms 2020, is available from the ICC. The rules have also been aggregated into freely available Incoterm tools.
Although SEIA 101 does not mandate the use of Incoterms, incorporating them can help companies align their business and supply chain with the standard. Incoterms clearly outline the responsibilities of each party in a contract, specifying who bears the risk and costs for various activities. This clarity enhances accountability, aligns expectations among all parties, and minimizes the potential for misunderstandings.
Certain concepts and requirements outlined in SEIA 101 might be unfamiliar to the solar industry, but they are well-established in other sectors. Fortunately, an abundance of tools, expertise, and best practice guidance are available to help solar companies understand and adhere to these concepts and requirements. Solar companies that use these resources will find it easier to not only align with SEIA 101, but also improve their supply chain transparency to make solar projects smoother and more efficient.
Jay Cornmesser is Vice President, North American Surface Transportation at C.H. Robinson.
