The responsible solar supply chain How companies can align with the new SEIA 101 standard and stay compliant with forced-labor laws.

Jay Cornmesser, VP of North American Surface Transportation, C.H. Robinson

Solar products are among the freight that’s increasingly at risk of being detained at ports as countries try to stop the flow of goods made with forced labor. In the U.S., for example, the Uyghur Forced Labor Prevention Act (UFLPA) has resulted in over $500 million worth of electronic goods being seized, exported or destroyed at the border in just the last two years.

To help solar companies comply with these laws, the Solar Energy Industries Association (SEIA) recently released a draft of its SEIA 101 standard, which is expected to be published early next year. The standard provides guidance for how companies can trace the history of solar products from raw materials to finished goods so they can identify and address forced-labor risks in their supply chain.

Some companies may consider the changes that they need to make to align with the standard as merely more hoops to jump through. But in truth, the standard presents an opportunity for companies to harness the power of their supply chain to safeguard their solar projects from customs-related stoppages and other disruptions so they can keep solar projects on schedule and on budget.

Areas of focus

Meeting the requirements in SEIA 101 can help solar companies prevent compliance issues with laws like the UFLPA and prepare them to better respond if such issues do come up. As part of this journey, solar companies will need to strengthen their business and supply chain in key areas like:

Forced labor compliance: Driving forced-labor risks out of solar products and projects needs to be an intentional effort for solar companies across their operations and those of their suppliers.

For instance, they should ensure their employees and suppliers are educated on forced-labor laws through training and communications. They should also update their code of ethics, contracts and purchase orders as necessary to confirm their compliance with the laws. And they should audit all suppliers and manufacturers in their supply chain. Freely available resources like the International Labour Organization’s forced labor indicators and the U.S. Department of Labor’s Comply Chain tool can ease this process.

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 program, companies should consider conducting a supply chain tracing exercise in which they identify every party and input in their supply chain. They can then compare the list of parties against a resource like Sheffield Hallam University’s database of companies operating in the Uyghur Region.

Solar companies should also use supply chain mapping to document the origins and journeys of products as well as their components and raw materials. The mapping should provide visibility into not only manufacturing but also trading, sorting and transporting milestones so no customs questions go unanswered. Supply chain mapping is not a one-size-fits-all approach and should be a continuous process. Forced labor compliance requirements and lists of in-scope materials often change, so companies that do not continue to map their supply chain with regular data collection and reporting open themselves up to significant risks.

In the solar industry, it’s not uncommon for companies to source inputs from multiple suppliers. To mitigate risks of non-compliance and strengthen their traceability management program, solar companies should vet new suppliers with the same auditing and training as existing suppliers. Ensuring that all suppliers adhere to consistent codes and compliance requirements will strengthen supply chain resilience and allow companies to identify risks as quickly as possible.

Country-of-origin compliance: Improper country-of-origin (COO) markings can make solar products an easy target for U.S. Customs at the border.

All foreign goods coming into the U.S. must include a COO marking that’s written in English in a legible and as permanent a manner as possible. The marking must also be clearly and conspicuously placed on the product. Some goods, like electronics, have unique marking requirements.

Adhering to these rules – and avoiding common mistakes like using abbreviations or placing the markings in locations that aren’t easily visible – can reduce the likelihood of products encountering issues at U.S. Customs.

Well-defined responsibilities with Incoterms: International Commercial Terms, or Incoterms, are internationally recognized terms and conditions that define a buyer’s and seller’s responsibilities in a trade contract. The terms are created and published in 29 languages by the International Chamber of Commerce (ICC).

While SEIA 101 doesn’t require the use of Incoterms,  they may help companies that want to align their business and supply chain to the standard. That’s because the terms clearly define the obligations of each party involved in a contract, including who assumes the risk and costs for certain activities. This makes parties more accountable to the success of solar projects, aligns all parties on expectations and reduces the potential for confusion.

The latest Incoterms edition, Incoterms 2020, is available from the ICC. The rules have also been compiled into freely available Incoterm tools.

Support to ease alignment

Some of the concepts and requirements in SEIA 101 may be new to the solar industry, but they’re well-established in other industries. And a wealth of tools, expertise and best practice guidance are available to help implement them. Solar companies that embrace these resources will find that achieving alignment with SEIA 101 will be easier and faster, and their ability to enhance compliance and keep projects moving forward using greater supply chain transparency will happen sooner.