BACKGROUND TO COMMODITY TRADING – Responsible Trading Project

Facts, Figures & Concerns

Switzerland is one of the most important commodity trading hubs in the world. With an estimated 500 companies employing approximately 10,000 persons the commodity trading sector contributes about 4.8 per cent to the country’s GDP (Swiss State Secretariat for Economic Affairs- SECO). The sector is also supported by transaction financing and inspection services.

Why Switzerland?

Switzerland has attracted world-commodity traders due to its favorable business environment as evidenced by:

Strong political and legal framework fostering predictability for business
Stable currency and developed financial markets
Favourable tax regime

In addition, the country’s long history in the sector guarantees availability of abundant knowledge and expertise locally.

Information on commodity trading in Switzerland is not comprehensive and knowledge gaps on many aspects persist some of which this research project aims to fill.

Commodity Trading in Numbers

Source: The Swiss Trading & Shipping Association

Schematic Commodity Trading value chain and potential adverse human rights impacts

Activity	Potential Adverse Impacts
Buying
● Sourcing from producers, other traders or commodity exchanges	● Child labour ● Sexual and gender-based violence ● Lack of community consultation ● Environmental pollution ● Lack of access to effective grievance mechanisms ● Exploitative working conditions ● Unsafe working conditions (Health & Safety issues) ● Forced labour, human trafficking and Modern slavery ● Bribery and corruption
Transporting
● Moving commodities from point of purchase to storage locations	● Environmental pollution (air, water, and land) ● Exploitative working conditions ● Lack of access to effective grievance mechanisms
Storing
● Temporal warehousing of commodities for later sale is necessary in order to match production and consumption timing or to accumulate adequate volumes	● Environmental pollution (air, water, and land) ● Exploitative working conditions ● Lack of access to effective grievance mechanisms
Transforming
● Changing the commodity for further use through blending, crushing, mixing using a variety of methods. E.g. crude oil refining and blending, soybean crushing etc.	● Environmental pollution (air, water, and land) including carbon emissions ● Exploitative working conditions ● Lack of access to effective grievance mechanisms ● Health & Safety issues
Selling
● Transferring ownership of commodity to other users	● Environmental pollution (air, water, and land) including carbon emissions ● Exploitative working conditions (sea fearers) ● Lack of access to effective grievance mechanisms ● Lack of value chain transparency