First Solar Finds Forced Labor in Malaysian Factory

First Solar, a U.S.-based solar panel manufacturer, said a third-party audit found that its factories in Malaysia had workers who were victims of forced labor. The company disclosed the finding in its 2023 sustainability report, adding that some of its migrant employees were "subjected to unethical recruitment," passport retention practices and "unlawful retention of wages."

The company said it has since returned all passports and "unlawfully retained wages" to the workers. First Solar also updated its service agreements to "prevent any recurrence of the issue" and contracted a third-party to "develop a reimbursement plan" for the workers, the report said. First Solar is also working with the providers to ensure that illegally charged recruitment fees are paid back, the report said.

CEO Mark Widmar said First Solar disclosed the finding "because of our commitment to transparency." He also said the company wanted to "raise awareness of modern slavery risks that hide in plain sight and to illustrate the value of an independent third-party social audit conducted in a credible, comprehensive manner."

The company said the audits were conducted at First Solar factories in the U.S., Malaysia and Vietnam, and that they found four of its "onsite service providers" in Malaysia employed foreign migrant workers who were victims of forced labor. The audits also found that the onsite service providers did not communicate the terms of employment in the workers' native languages and did not have an adequate "management system" or policies in place for the workers, the report said.

First Solar also found that some workers were working over 60 hours a week due to "voluntary overtime." The company said it has since introduced a "monitoring report" to track work hours and ensure no employee works more than 60 hours a week.

First Solar will continue to audit its operations, including in Malaysia, and has joined the Responsible Business Alliance, a business organization focused on corporate social responsibility. "The intent behind investing in these audits is not to rubber-stamp compliance with our policies," Widmar said, "but to identify and remedy existing and potential issues and ensure that we continuously improve on our commitment to Responsible Solar."

Widmar said the company used a "credible independent" third-party auditor, adding that some audit programs developed by trade associations within or "purporting to represent the solar industry" endorse initiatives supported by the very companies reported to have ties to "the persecution of Uyghurs in Xinjiang."

"The fact is that symbolic pledges and self-defined and -governed ‘protocols’ and ‘initiatives’ lack real accountability," Widmar said. "Furthermore, they have shown that they cannot withstand the scrutiny caused by legislation such as the Uyghur Forced Labor Prevention Act (UFLPA) and only serve to undermine our industry’s reputation and credibility."

While the company's audit did award First Solar's U.S. and Vietnam factories "platinum status," the "highest possible" validated assessment program rating, the report found that "subsidies" at the Vietnam facility were not being paid correctly. First Solar said it "promptly adjusted the subsidies and established a regulatory monitoring tool to address the root cause."

Solar has been an industry of concern for forced labor. A new report earlier this month found that while solar module suppliers and manufacturers have split their supply chains to comply with U.S forced labor requirements, some continue to have ties to Uyghur forced labor (see 2308020034 and 2305150034).