The solar industry finds itself at a critical juncture. What began as regulatory action in the US with the Uyghur Forced Labor Prevention Act (UFLPA) has rapidly evolved into a global movement demanding unprecedented transparency across photovoltaic supply chains. For European solar professionals, this shift represents both a challenge and an opportunity to demonstrate leadership in sustainable manufacturing practices.
“Although it all started four years ago in the US with the UFLPA, it very quickly spilled over to Europe,” explains George Touloupas, Intertek CEA’s vice president of environmental, social and governance (ESG) and new services. “Europe was already moving in a similar direction, but that was like a spurring action. Things have progressed quite a bit, and this kind of due diligence is becoming standard in the US and in Europe.”
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A patchwork of emerging regulations
The European regulatory landscape for solar supply chain compliance is complex and rapidly evolving. Multiple frameworks are converging to create what Touloupas describes as a comprehensive oversight system that extends far beyond the solar sector alone.
“We have the CSRD (Corporate Sustainability Reporting Directive) and CSDDD (Corporate Sustainability Due Diligence Directive) that are coming in a couple of years, we have forced labour regulation, we have country-level regulations like the Transparency Act in Norway, we have the German supply chain law, we have in the UK the upcoming forced labour ban,” Touloupas outlines. “There is a lot that is out there, and it’s general—it’s not focused on the PV industry specifically.”
The Carbon Border Adjustment Mechanism (CBAM) adds another layer of complexity, though its immediate impact on solar modules is none. “As of today, there’s no indication that components used to manufacture PV modules are going to be part of that,” Touloupas notes, though he acknowledges that aluminium frames could potentially fall under scrutiny.
“There is strong advocacy from Solar Power Europe to exclude such components, as it would add unnecessary complexity,” he says.
Despite delays and political compromises that have diluted some regulations—particularly around employee thresholds and turnover requirements—the trajectory remains clear. “The regulatory environment is ratcheting up for the solar supply chain,” Touloupas confirms.
Industry proactivity amid regulatory uncertainty
What distinguishes the current moment is the industry’s proactive stance. Rather than waiting for regulatory clarity, Touloupas says sophisticated buyers are implementing comprehensive due diligence processes driven by investor demands and corporate governance requirements.
“The industry is much more proactive,” Touloupas emphasises. “A lot of people feel they must be proactive and get ahead of regulation to avoid unnecessary risk. The mandates come from the lenders—for example, if a project is financed by EBRD (European Bank for Reconstruction and Development), strict due diligence requirements must be met.”
This proactivity extends beyond regulatory compliance to encompass broader ESG considerations. Development finance institutions, pension funds and major investment funds—particularly those based in Europe—are driving demand for comprehensive supply chain verification.
Supply chain complexity and risk concentration
The solar supply chain’s global nature and constantly shifting manufacturing landscape create significant challenges for ESG compliance. Touloupas identifies a clear risk hierarchy within the supply chain structure.
“The more you go upstream, the riskier it becomes, because it goes outside the vertical control of the big players,” he explains. “The more verticalised the manufacturer is, the better the control is and the system of proof, as traceability systems are more integrated.”
For companies purchasing polysilicon rather than manufacturing it internally, the challenge intensifies dramatically. “If they’re just making ingots and wafers, then you have to buy the polysilicon, and then you have to trace it, even up to quartz. It’s a different supply chain—that’s how the risk shows up.”
Geographic risks remain concentrated in regions where independent third-party audits cannot be conducted. “Any regions where third-party independent audits cannot be conducted are identified as high-risk within due diligence frameworks,” Touloupas states, referencing the ongoing concerns that sparked the initial regulatory response in the US.
However, he cautions that risk extends beyond geopolitical concerns to encompass standard labour and environmental practices. “You might audit a factory that doesn’t pay overtime or violates work regulations. This can happen in the US, in Europe, it can happen anywhere in the world.”
The high stakes of non-compliance
The consequences of inadequate ESG compliance extend far beyond regulatory penalties. Touloupas emphasises that reputational and financial risks can be devastating for companies caught unprepared.
“The reputation and financial risks are significant,” he warns. “If an issue arises within the supply chain, it will be a huge problem—it’s not like buying products where you find that 1% of them are defective and you can quantify the loss.”
Real-world examples illustrate these risks. “We’ve been called in to do traceability after the products have been produced, have been installed, the PV plant has been operating for a couple of years, and then it cannot be sold because there’s something missing—there was no traceability,” Touloupas says.
The financial implications are stark. Projects lacking proper documentation face significant value reduction when sophisticated buyers with high ESG standards cannot acquire them due to compliance gaps. For publicly listed companies, there is of course the added risk of share prices taking a “nose dive” on the back of reputational damage.
Best practices for due diligence
Effective ESG compliance requires a systematic approach combining multiple verification methods. Touloupas recommends a two-pronged strategy focusing on both facility audits and traceability verification.
“They should hire independent third parties besides doing their own internal diligence to examine the supply chain of the materials,” he advises. “Do audits at the most important nodes—you can go all the way up to polysilicon or even further, but not everybody needs to do that.”
The process involves both qualification audits to establish baseline ESG and traceability practices, as well as ongoing batch audits during production. “We follow very focused checklists that are tailored for our industry,” Touloupas explains. “When we’re doing batch traceability audits, this is done on a sampling basis—it’s impossible to do it for every single PV module, but the traceability systems have already been audited to ensure they work reliably.”
Documentation requirements are extensive. “You cannot prove the linkage between supply chain nodes just by looking at invoices—that’s not enough. You have to look at a much bigger breadth of documentation and proof.”
The role of certification and standards
Industry initiatives, such as the European Solar Stewardship Initiative, are developing standardised approaches to ESG certification. However, Touloupas cautions against viewing certification as a complete solution.
“Even if there is a certification system, the buyers will feel the need to do some additional due diligence on the provenance of the raw materials,” he predicts. “It’s a good initiative, but it’s not the end of the road—even if factories are certified, sophisticated buyers do go way beyond to make sure that the product they get is made with the supply chain that they have approved.”
Looking ahead: evolution and adaptation
The regulatory landscape will continue evolving, with long-term trends pointing toward comprehensive carbon accounting and expanded traceability requirements. “I think every manufacturer will have to provide carbon footprint accounting at some point,” Touloupas predicts.
For industry professionals navigating this transition, the message is clear: proactivity is essential. “We need to be proactive because if there is something wrong with the supply chain, the implications can be substantial,” Touloupas concludes. “The value of a project that contains tainted components is obviously reduced, and this is financially material.”
As the solar industry matures and regulatory frameworks solidify, companies that invest early in robust ESG compliance systems are likely to find themselves better positioned for long-term success. The current period of uncertainty and complexity represents an opportunity for industry leaders to establish best practices that will define standards for years to come.
The path forward requires balancing thoroughness with commercial practicality, but the stakes—both reputational and financial—make comprehensive ESG compliance not just a regulatory necessity, but a business imperative.
PV Tech publisher Solar Media will host the PV ModuleTech Europe event in Málaga, Spain on 2-3 December 2025. Speakers include George Touloupas, who will present on the topic of solar supply chain verification and ESG compliance, next month. For full details and booking options click here.
