The recent G-7 summit reaffirmed two priorities of leading democratic nations: addressing climate change and combating forced labor. Based on a new report examining evidence that links solar panel manufacturing to forced labor in China, achieving one may come at the expense of the other. However, with investments in a greener economy, there is an opportunity for governments to address human rights violations and grow their own economies if they can spur their renewable industries at home.
A recent report from Sheffield Hallam University adds to the mounting pressure on governments and corporations to take action against forced labor and what many (including the U.S. government) have referred to as cultural genocide in the Xinjiang Uyghur Autonomous Region. The report says that more than 2.6 million people in this region of western China have been forced into “surplus labor” programs. The report explains that the reality of these programs is that individuals are placed into internment camps or moved domestically (often without their families) to manufacturing facilities to perform manually intensive work. Despite their skills and previous professions (many were doctors, lawyers, professors, etc.), the report finds that these individuals have had their freedom of choice for employment taken away and are forced to work and live under constant surveillance.
The SHU report also details how the creation of solar panel raw material facilities were knowingly built in close proximity to internment camps. The camps are similar to a military-style operation, with high walls, surveillance, laborers’ sleeping barracks, reeducation facilities to instill compliance, as well as roads and train tracks built for transportation. The existence of these camps has been proven and monitored since 2018, but the SHU report now shows the deep connection they have to the global supply chain of materials to produce solar panels. (The Chinese government denies all of these claims, and says the camps are vocational schools.)
The solar industry has arrived at this moment because China has strategically solidified its position as the go-to producer of materials necessary for solar panels by offering sweetheart deals that were hard for companies to refuse. This effectively pushed other countries and their companies aside in the market to enable China to attain market dominance. China, now the top global producer of materials for the solar industry, has continued to throw its weight behind its solar manufacturing industry through government subsidies, minimizing environmental requirements, and—as indicated by the recent report—exploiting minority populations in internment camps.
For solar companies, diversifying their procurement away from China’s Uyghur region seems like a financial and logistical hurdle—and in the immediate term, it might be. The SHU report finds that almost 45% of the world’s supply of polysilicon (a material required for solar panels) is located in this region of western China. However, creating external production facilities away from these forced labor programs is both an ethical necessity and makes good business sense.
The need for secured supply chain networks is especially critical because China has threatened to reduce access to “rare earth” minerals which go into new technologies heralded as necessary for climate action. This includes batteries, another product criticized for its lack of supply chain transparency. Further, as the automotive industry has recently seen with the shortage of high-tech processor chips, it’s clear that relying on a single source for materials is a risk that can significantly increase costs to companies and consumers.
The time for the solar industry to disentangle from its reliance on forced labor is upon us, and luckily there are multiple facilities outside of China that can provide similar raw materials. Utilizing those existing facilities would enable the growth of global solar manufacturing capacity for the upcoming decades, which is in the interest of all nations seeking to ethically meet their climate change obligations.
Government requirements and subsidies can also help pave the way for a more secure global solar supply ecosystem. Such requirements would enable companies to expedite the process of purchasing solar materials from locations outside of China. Companies, however, should secure contracts with alternative international manufacturers before new requirements come into play to prevent supply disruptions to their business.
As pressure mounts on governments and companies to clean up labor practices, the time has come to make these necessary decisions. This includes companies investing in ethical sources for materials, as well as governments supporting diversified manufacturing capacity to secure future supply, which is in their national interests and necessary for their goals to combat climate change. It is an easy win-win.
The G-7 countries have a path to ensure their climate change ambitions match their ethical principles on combating forced labor. There may initially be additional costs associated with taking these steps; however, the cost of doing nothing is immeasurable because there is no such thing as “clean energy” if it is made by the unwilling hands of those trapped in forced labor.
Shawn Bhimani is an assistant professor of supply chain management at Northeastern University. His research on preventing forced labor helps organizations to improve their procurement practices and reduce global supply chain risks. He has held multiple procurement and sourcing positions at a leading Fortune 500 company.