First Solar is a US-based manufacturer of solar photovoltaic (PV) panels. Headquartered in Arizona, the company is the leading global supplier of thin-film modules that are used primarily in utility-scale and commercial power plants. The company has manufacturing facilities in India, Malaysia and Vietnam as well as the US and operates a sector-leading approach to the manufacturing and recycling of its solar modules.
Investor objective: Delivery, acceleration and enhancement of the company’s positive impact
Engagement objectives:
- Achieve net zero emissions by 2050, with substantive reductions across all scopes, in the near-term by accelerating progress on Scope 1 and 2 emissions, particularly through renewable energy sourcing.
- Improve transparency on hazardous chemical management.
- Enhance disclosure on recycling effectiveness.
Background
Despite its critical role in global decarbonisation, First Solar ranks among the WHEB fund’s highest financed emitters. A key frustration has been its failure to leverage its own solar technology to reduce Scope 2 emissions.
To address this, we has engaged the company through the Investors for Sustainable Solar initiative. The company has recently made good progress however, with SBTi validation of near and long-term targets, and publication of a carbon reduction roadmap. First Solar also targets 100% renewable energy by 2028, delayed by two years due to rapid production growth.
Actions
We took part, along with collaborating investors, in a group call with First Solar’s Head of ESG and Sustainability and its Investor Relations team, in which we outlined the following asks:
- Replacement of fossil-based energy with renewables.
- Increased energy efficiency.
- Greater disclosure on hazardous chemicals and recycling.
Outcome: Milestone 4 - Company provided evidence that the issue is being managed in line with the policy or strategy, demonstrating concerns have been addressed.
First Solar has made meaningful progress though some challenges remain.
Scope 1 and 2 emissions continue to rise as a result of the company’s rapid growth, with production expected to quadruple by 2026. To manage this, First Solar is focusing on reducing emissions intensity through improvements in energy efficiency. Achieving absolute reductions will require greater procurement of renewable energy, which the company is exploring through power purchase agreements, such as one recently established in India1, alongside renewable energy credits and partnerships with customers.
On hazardous chemicals, the company confirmed that its internal chemical policy is under review and agreed to consider the group’s invitation to join the Toward Zero Exposure initiative, which aims to mitigate worker risks. Recycling performance was also discussed. First Solar’s solar modules are 95% recyclable but the company has not disclosed what proportion of its modules are actually recycled. The company clarified that volumes are still very low. Most recycled material comes from their own manufacturing processes as most modules have not reached the end of their operating life. The company expects volumes to begin to pick up by 2030 and is keen to understand how best to report on this as the process matures.
Beyond environmental concerns, First Solar also highlighted its commitment to community engagement, citing its partnership with Vitro in Pennsylvania as an example of supporting high-quality, long-term jobs and training. The company also continues to advocate actively on public policy, working to counter misinformation about solar energy and address local resistance.
As the global economy moves towards decarbonisation, First Solar is well positioned to benefit from growing solar demand. Its decarbonisation targets are now aligned with the Paris Agreement, and it has implemented robust systems and processes to reduce emissions intensity. While short-term emissions will rise due to expansion, we expect meaningful reductions over the next five years. We will continue to monitor progress on absolute emissions, recycling transparency, and chemical safety as part of our commitment to achieving net zero across our portfolio by 2050.
1 https://www.whebgroup.com/engagement-case-study-net-zero-carbon-at-first-solar-q1-2024
