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REC Annual Report 2011
23
In 2011, REC has focused on implementing a standardized sourcing
process for the significant direct material suppliers of RECSolar’s wafer,
cell andmodule production and to parts of RECWafer. Suppliers in these
areas typically represent more than 80 percent of the annual expenditure
of RECSolar. Sustainability has formed a key part of supplier pre-
qualification reviews, supplier audits, supplier performancemanagement
and supplier development. The sustainability issues cover human rights,
freedomof association, child and forced labor, corruption as well as
occupational health and safety.
In 2011, all significant direct material suppliers for REC Solar
have undergone audits on sustainability. For RECWafer in Norway,
sustainability is also included in audits conducted on approximately
half of the significant direct material suppliers and key business
partners. No suppliers were identified as having significant risk
regarding sustainability issues.
Audits for REC Silicon suppliers were not conducted in 2011. In 2012,
REC will seek to further harmonize on the supplier quality process
including sustainability across all business segments.
Stakeholder relations
In REC, stakeholder engagement takes many forms; e.g. through
partner programs with customers, close dialogue with investors, local
community engagement and through membership in associations which
influence our frame conditions. The most important subject in 2011
regarding employees has been the organization restructuring and
shutdown of capacity in Norway. In this context the unions have been
involved in the whole process. A close dialogue was also kept with
representatives for the regional and local governments and other
affected stakeholders
REC works to maintain customer relations by various means. REC Solar
conducts annual customer satisfaction surveys, which is distributed to
business partners involved in the solar module markets. Customers can
also provide feedback directly online, related to their own products.
RECWafer and REC Silicon engage with customers more in relation to
specific technical issues, and so meet with customers face-to-face or via
formal technical exchange events.
REC recognizes that it is a key player in the communities in which it
operates. REC Silicon has established a community affairs strategy and
seeks to reinforce relationships with local authorities, industrial and
community neighbors through participation in community affiliations
and employee volunteer programs. RECWafer supports local community
activities for children and youth, while there is no tradition in Singapore
for social donations.
REC participates in the industry-wide PVCYCLE program in Europe,
which works to establish operational collection and recycling solutions
for end-of-life PVmodules. REC is also active in the European
Photovoltaic Industry Association (EPIA), which contributes to the
European development of predictable, sustainable and just frame
conditions for solar energy. REC is also supporting Bellona (NGO), in their
work to strive for increased use of solar energy, through influence on
political energy and climate processes.
Product responsibility
REC has adopted the principle of product stewardship promoting the
development of reduced health and environmental impacts from our
products. Product stewardship is to be ensured in the whole lifecycle
fromR&D, design, sourcing, manufacturing, distribution, installation,
operation, maintenance, decommissioning through disposal as well as
recycling. All products are in compliance with relevant prevailing
legislative regulations. RECmodules are designed to meet the highest
quality standards and provide stable output over the lifetime of the
product. Our most recent solar module, the REC Peak Energy Series,
is certified according to CE, UL1703, IEC 61215 and IEC61730.
Our internal qualification requirements exceed the requirements in the
referenced standards.
REC wafers and modules are also certified to benefit from the ten
percent premium available as part of an Italian photovoltaic incentive
scheme for solar systems containing European components.
Corporate governance
Good corporate governance is essential to ensure that our business is
run in a way that protects the long-term interests of all stakeholders.
The Board of Directors has approved and implemented corporate
governance principles endorsing and complying with the Norwegian
Accounting Act and the Norwegian Code of Practice for Corporate
Governance (Code of Practice) issued by the Norwegian Corporate
Governance Board, most recently revised on October 20, 2011. REC’s
compliance with the Code of Practice is detailed in the report on
Corporate Governance for 2011 which is included in this Annual
Report on page 26.
OUTLOOK
Market
The steep price decline on PVmodules and other components has led to
favorable end-user returns on investments in PV systems in a number of
markets.
The 2011 price decline continued to improve the competitiveness of
solar energy versus conventional sources of energy, and the levelized
cost of electricity fromPV is now below the retail electricity price in
certain regions around the world. The cost of stimulating the use of
PV for electricity generation is reduced significantly, and increased
interest for PVas a clean source of energy from policymakers can be
observed. Going forward it is expected that a number of markets, in
particular in Asia and the US, will continue to grow and hence demand
will diversify away from the key markets in Europe.
Overall demand outlook for 2012 is highly uncertain, but industry analysts
are forecasting a global solar market in the range of 26 to 32GW.
Analysts are still forecasting industrywideproduction capacity above
estimatedglobal demand in2012. The currentmarket price level is putting
pressure on high cost capacity and there are signs of capacity reductions
across the solar value chain, includingpolysilicon. Despite these
adjustments, through thefirst quarter 2012, theprices have continued to
decline across the value chain, and thismay continue throughout 2012.
Report from the Board of Directors