Article by Marco Borradori, Mayor of Lugano

Dear Members of the Lugano Commodity Trading Association (LCTA),

2021 marks the tenth anniversary of your Association. LCTA has evolved considerably over the years attracting more and more companies active in commodity trading, shipping, insurance and commodity trade finance. With their commitment, the founders of the LCTA have made a lasting contribution to the development of a dynamic commodity trading hub in Southern Switzerland. Today, Lugano is the third commodity trading hub in Switzerland. Your companies play an important role for the economy of the entire region.

For these reasons, the City of Lugano has supported LCTA from the very beginning, collaborating in the promotion of the Lugano commodity trading hub through international missions and in the organization of events, such as the Global Commodities Conference at the LAC, or simply by hosting at Palazzo Civico the participants of the graduation ceremony for the “Certificate of Advanced Studies – Commodity Professional”.

To succeed in the very competitive environment of commodity trading you tackle challenges with professionalism, determination and enthusiasm. With the same spirit, we strive to make Lugano the ideal place to live and work, for you and your families.

I wish you every success. Cento di questi giorni LCTA!

Marco Borradori, Mayor of Lugano

Article by Dr. Pietro Poretti

On 28 September 2020 the Extractive Industries Transparency Initiative (EITI) released new reporting Guidelines for companies buying oil, gas and minerals from governments.

Payments by companies purchasing natural resources generate a significant portion of public revenues in some of the world’s poorest countries. Such payments are exposed to governance risks as they may take place in environments of weak institutions and widespread corruption. Risks have been identified at various levels, including the selection of buyers and allocation of sales contracts; sales transactions and collection of revenues; and transfer of proceeds to the treasury. The EITI Guidelines represent a further step towards greater transparency in natural resources and complement mirroring reporting requirements for selling entities, building on the 2019 EITI Standard which requires governments to disclose volumes received and sold as well as revenues from any oil, gas or mining-related deal.

The 2020 Guidelines’ key disclosure requirements for buying companies are as follows:

  • Who is selling the product? (counterparty name – seller; counterparty country, load port)
  • Who is buying the products? (buying entity name)
  • What product is being purchased? (product type; volume purchased)
  • What does the buyer pay to the seller for the product?

Companies can use the templates annexed to the Guidelines for their disclosures. The forms offer different levels of disaggregation of the data presented: volumes and values by individual seller; volumes by cargo, and values by individual seller; or volumes and values by cargo. Further, the Guidelines address swaps and resource backed loans. Three Swiss-based commodity trading firms (Glencore, Gunvor and Trafigura), are already disclosing their transactions around oil and mining where states or SOEs are concerned in yearly reports.

Beside demonstrating their financial contribution to the economies of the countries from which they purchase commodities, regular disclosures can increase a company’s reputation and its social license to operate. Improved transparency may also facilitate access to capital from financial institutions, notably in light of the investors’ growing sensitivity to environment, social and governance (ESG) criteria, as well as the emergence of sustainability-linked financing schemes. As more and more governments in the 55 EITI implementing countries include information on receipts from the sale of natural resources in their annual reports, company-level reporting also provides companies with the opportunity to contextualize and complement information being disclosed by state and state-owned enterprises counterparts.

Switzerland is not an EITI implementing country. Nevertheless, through the State Secretariat for Economic Affairs (SECO), Switzerland has directly supported the elaboration of the EITI Guidelines and is urging trading companies to use the Guidelines to build trust in a more transparent and accountable commodity trading sector. Promoting the development and adoption of a global standard also serves the purpose of preserving the level playing field vis-à-vis other trading hubs. Last but not least, Swiss-based companies can shape the development of future disclosure standards by taking part in the activities of the EITI Working Group on Transparency in Commodity Trading, a forum which also includes representatives of civil society, host and home countries governments and state-owned enterprises.

The reform of the Swiss corporate law recently approved by the Parliament stops short from requiring companies to disclose payments to SOEs for the purchase of natural resources. The amendments to the Swiss “Code of Obligations” – not yet in force – mirror the content of EU Directives 2013/34 and 2013/50, requiring companies active in the exploitation of natural resources to publicly disclose in a special report all payments to public authorities that exceed CHF 100,000 per year. Thus, this new disclosure requirement will only affect companies that extract raw materials. Nevertheless, the Federal Council is authorized, as part of an “internationally coordinated approach”, to extend the scope of application to companies that trade raw materials (see new Art. 964 f of the Swiss Code of Obligations).

Public attention towards good governance and transparency is growing, as shown by the narrow rejection of the “Responsible Business Initiative” in Switzerland. The Biden administration has been urged to reengage with EITI after the previous administration decision to withdraw the United States from the initiative in 2017. These elements, combined with increased challenges for public budgets posed by COVID-19, suggest that the high-water mark for boundary-pushing transparency standards may still lie ahead of us.

The EITI Guidelines and the reporting templates are available at this link

Dr. Pietro Poretti currently serves as Head, Economic Development Division, Città di Lugano. In 2019-2020 he consulted for the EITI Secretariat and assisted in the development of the transparency Guidelines.

In order to tackle the COVID-19 emergency, the Canton of Ticino has activated an information hotline for companies: 0840 117

16 April 2021

Coronavirus: Next phase of reopening on 19 April

8 February 2021

Coronavirus: special rules for entering Switzerland

These rules apply to all people who are permitted to enter Switzerland. That means they also apply if you are Swiss and returning to Switzerland after being abroad. You will find information on the individual rules and requirements at this link.

27 January 2021

Federal government to cover costs of tests for persons without symptoms and modify quarantine rules

The federal government will now pay for persons without symptoms to be tested so that those who are particularly vulnerable can be better protected and local outbreaks of infection can be contained early on. The quarantine rules have also been modified: with a negative test result a person may now come out of quarantine after seven rather than the full ten days.

13 January 2021

Federal council extends measures

  • restaurants, cultural venues, and sports and leisure facilities are to remain closed until the end of February
  • requirement to work from home
  • shops selling non-essential goods will be closed
  • restrictions on private events and gatherings
  • protecting people at especially high risk

12 August 2020

Large-scale events to be permitted from October under strict conditions and with a permit

The Federal Council took the decision to re-allow events for more than 1000 people from 1 October. Strict protective measures will apply and the events will have to be authorized by the cantons.

The Federal Council has also decided that masks will have to be worn during flights from 15 August. The wearing of masks on public transport has been compulsory since 6 July. The measure concerns all scheduled and charter flights taking off from or landing in Switzerland, regardless of airline.

26 June 2020

Workers from third countries to be permitted to enter Switzerland again

Workers from third countries to be permitted to enter Switzerland again

  • Since 11 May various steps have been taken to relax restrictions on entry to Switzerland.
  • 6 July the Federal Council will lift all corona-related restrictions on the admission of workers from third countries.
  • Third-country citizens are still not permitted to travel to Switzerland on holiday: entry for a stay of less than 90 days that does not normally require a permit will only be authorized in cases of special necessity.
  • Admission to work in the tourism or culture sectors again possible or to take education or training courses while working, e.g. as an au-pair, agricultural trainee or on a youth exchange program.

12 June 2020

Switzerland to lift COVID restrictions regarding all EU/EFTA states

The Federal Council took note of the decision taken by the FDJP to lift the entry restrictions that currently apply between all Schengen States as of 15 June. Controls at Swiss borders with these states will end on this date and full free movement of persons will be restored with all EU/EFTA states and with the United Kingdom.

Full free movement of persons with EU/EFTA states and the UK.

From 15 June, full free movement of persons will once again apply with all EU/EFTA states and the United Kingdom. All EU states with the exception of Bulgaria, Ireland, Croatia, Romania and Cyprus belong to the Schengen area. These six countries will remain on the high-risk list after 15 June, which means that restrictions will continue to apply to third country nationals wishing to enter Switzerland from these countries.

27 May 2020

Federal Council decides on extensive easing of measures as of 6 June

All events for up to 300 people may now go ahead. 
Spontaneous gatherings of up to 30 people are now permitted. Large-scale events with more than 1000 people continue to be prohibited until August 31st. All leisure and entertainment businesses and tourist attractions may reopen. Hygiene and social distancing rules must still be observed. The Federal Council has also decided to end the extraordinary situation under the terms of the Epidemics Act with effect from 19 June.

Recommendations on working from home remain in place. 
Businesses are free to decide on a return to the workplace. The Federal Council continues to recommend that people continue to work from home, not least to avoid overcrowding on public transport. Staff at especially high risk continue to enjoy protection. Employers are still required to allow people at high risk to work from home. If it is essential for someone to work on site, the employer must take steps to protect that person by adapting working processes or the workplace.

16 April 2020 

Federal Council to gradually ease measures against the new coronavirus

The Swiss Federal Council has decided that step by step starting from April 27 (in Canton Ticino from May 4, due to a more delicate situation), May 11 and June 8, companies are allowed to reopen provided they have a protection plan in place. (Art. 6, para 3, Ordinance 2 COVID-19)

The aim of the protection plan is to reduce the spread of COVID-19. Here are some basic principles for preventing transmission:

  • Hand hygiene and surface disinfection
  • Social and professional distancing
  • Encouraging teleworking and virtual meeting, installing physical barriers in the offices
  • Protection of vulnerable persons
  • Sick people should stay at home

And more concretely for a company:

  • All persons in the company shall clean their hands regularly.
  • Employees and other persons shall keep a distance of two meters between them.
  • Clean regularly surfaces and objects
  • Vulnerable persons are given adequate protection
  • Sick people are sent home
  • Employees and other persons concerned are informed of the regulations and measures taken
  • The instructions are implemented at management level in order to effectively implement and adapt the protective measures.

15 April 2020

The Canton of Ticino presented the first step to ease measures against the COVID-19 in force from April 20 to April 26. here

27 March 2020

The Canton of Ticino has updated the measures to fight COVID-19, here the last Order.

25 March 2020

Federal Council adopts emergency ordinance on granting of credits with joint and several federal guarantees

The Federal Council adopted emergency ordinance on granting of credits with joint and several federal guarantees. During its extraordinary meeting on 25 March 2020, the Federal Council addressed the issue of liquidity assistance for SMEs, which should have rapid access to credit facilities to bridge liquidity shortfalls caused by the new coronavirus pandemic. Companies are advised to apply for the credit facilities at their main bank. Facilities will be secured by the Confederation. The corresponding ordinance enters into force on 26 March 2020, from which date credit applications can be submitted.

A quick and straightforward process;

Affected companies can apply to their banks for bridging credit facilities representing a maximum of 10% of their annual turnover and no more than CHF 20 million. Certain minimum criteria must be met. In particular, the company must declare that it is suffering substantial reductions in turnover because of the COVID-19 pandemic.

Credits of up to CHF 500,000 will be fully secured by the Confederation, and will be paid out quickly and with the minimum of bureaucracy. Zero interest will be charged. The credit application form will be available on the website “” from Thursday, after the ordinance enters into force.

Bridging credits that exceed CHF 500,000 will be secured by the Confederation to 85% of their value; the lending bank will secure the remaining 15%. Each company can obtain a credit of this type for up to CHF 20 million, which means a more rigorous bank review will be required. The interest rate on these credits is currently 0.5% on the loan secured by the Confederation. Companies with a turnover of more than CHF 500 million are not covered by this programme.

More details and credit application form: here

21 March 2020

The Canton of Ticino has implemented new measures to fight COVID-19

All cantonal measures can be seen on the following website:

With regard to the measure on the closure of economy RG 1570, in particular as to point 7“All activities that can be carried out remotely at home are permitted. Access to offices is not permitted for the public. Any presence in the office must be limited and is only possible in compliance with the rules of hygiene and social distance”, trading companies are invited to extend smart-working from home as much as possible and, as far as possible, to keep in the office only a minimum number of staff that is essential for the main activity. This staff should respect the rules of hygiene and social distance. Under no circumstances are the offices open to the public.

16 March 2020

Federal Council declares ‘extraordinary situation’ and introduces more stringent measures

The Federal Council has declared an “extraordinary situation” in terms of the Epidemics Act and has introduced new measures. The declaration of “extraordinary situation” allows the Federal Council to order the introduction of uniform measures in all cantons.

As of March 16 at midnight until April 19 all shops, restaurants, bars and entertainment and leisure facilities will remain closed. Not affected by the new measures are food stores and pharmacies. The Federal Council has also decided to introduce checks on the borders to Germany, Austria and France (to Italy this measure was already taken). The Federal Council has also authorised the deployment of up to 8000 members of the armed forces to assist the cantons at hospitals and with logistics and security.


  • Press release of the Federal Council (16.04.2021): here
  • Press release of the Federal Council (08.02.2021): here
  • Press release of the Federal Council (27.01.2021): here
  • Press release of the Federal Council (13.01.2021): here
  • Press release of the Federal Council (12.08.2020): here
  • Press release of the Federal Council (26.06.2020): here
  • Press release of the Federal Council (12.06.2020): here
  • Press release of the Federal Council (27.05.2020): here
  • Press release of the Federal Council (16.04.2020): here
  • Cantonal Order 1827 (15.04.2020): here
  • Cantonal Order 1649 (27.03.2020): here
  • Federal Order 2 COVID-2019 (27.03.2020): here
  • Press release of the Federal Council (25.03.2020): here
  • All cantonal measures: here
  • Press release of the Federal Council (16.03.2020): here
  • Cantonal measures to support Ticino economy (16.03.2020): here
  • Information on the reduced working hours allowence: here

The secretariat of LCTA is operating, in case of any questions do not hesitate to contact us (

Last update: 10 February 2021

The Lugano Commodity Trading Association (LCTA) is a non-profit organization that brings together companies active in commodity trading, shipping, insurance and commodity trade finance. This year the LCTA celebrates its 10th anniversary and after a decade, President Thomas Patrick has decided to resign. The Executive Board of LCTA, according to the by-laws, has elected the new President: Matteo Somaini, General Manager Finance, DITH.

The LCTA would like to take the occasion to thank the outgoing President and would like to acknowledge the outstanding contribution made by him to the association. Thomas Patrick has always shown great commitment and personal investment and has been fundamental to the progress that our organisation has achieved over ten years. The change of President was communicated to LCTA members at the Ordinary General Meeting which unfortunately this year, due to the COVID-19 pandemic, could not be held physically, but took place by correspondence. Through an interview we would like to introduce you the new LCTA President.

Mr. Somaini, you have been involved in LCTA since the beginning, 10 years ago, what can you say about the evolution of the association over the years?

When we met the first time more than ten years ago – the Chamber of Commerce, a trading company, and a bank – we were six people aware of a rapidly changing business environment, with the objective to create value in the areas of: education, networking and communication to the public. After ten years, LCTA counts 53 members and we are part of STSA – the national association with whom we coordinate most of the public initiatives concerning the industry. Our association organises continuing education for people active in the sector and several years ago we started the “Certificate of Advanced Study – Commodity Professional”, in cooperation with Zug Commodity Association and Lucerne University of Applied Sciences and Arts.

We organise an annual conference attracting in Lugano people from all over Europe and we participate to selected events abroad, aiming to create opportunities for our members and promoting Lugano as major Trading Hub.

We see the result of the hard work of our secretary, president and board, with the contribution of all our members. Ten years ago, it was not taken for granted, especially given the little attitude of the industry to public initiatives, in the past.

What do you think is the biggest strength of LCTA?

I would say it is the sense of community. In Ticino we are about 70 companies, employing more than 2’000 people. It has become manifest to the members, with the time, that we are not just people working in the same industry, often dealing with different commodities, sometimes even competing on the market. We are a community, we share the same territorial area (Lugano is our base, the worldwide market is our business environment), we share interests and values. I believe that the awareness of this sense of community is at the same time the greatest strength of the association, as well as one of the most significant achievements of LCTA in the first decade of activity.

What is particularly important for you as President of LCTA?

My top listed consideration is that all members feel represented in the values of the association, aiming to preserve and grow the community that we have “discovered”. In parallel LCTA should focus to support members ad new companies in the industry by sharing know-how and creating value through our network.

What are you looking forward to doing as President of the association?

When we started to discuss the idea of funding the association, in 2010, we just overcame one of the most severe economic recessions of the history, we perceived that the world would have been different and we should quickly adapt our modus operandi, to satisfy new requirements, especially from the financial industry. It was one of the reasons that brought us together. Today we are facing something similar, to some extent more extreme, probably faster, certainly deeply affecting our lives as much as our business models.

Switzerland is the strongest country in the world for commodity trade finance, the first country for trading of energy, metals and soft commodities, and Ticino is one of the three commodity hubs in Switzerland. Swiss-based shipping companies handle over 20% of traded goods via sea all over the world. We have best in class companies providing services, managing logistic and risks, at every level of the supply chain of every category of commodities. I look forward to team-up with our board, all our members, and our peers in Switzerland – and why not in other important hubs around the world, like London, Singapore and Dubai – to take-up the new challenges. It is a unique innovation opportunity, not just technology based. We can lead the transformation through responsible innovation and move the industry to an approach based on co-opetition, aiming for long term and sustainable results, to create value for all stakeholders.

Article by Carlo Mazzoleni, Associate Lawyer, Studio Mazzoleni

Photo by Guillaume Périguois

On 1 January 2021 the EU Regulation 2017/821 of 17 May 2017 (the “Regulation”)[1] will come into force, establishing new mandatory supply chain due diligence obligations for EU-based importers of certain raw materials (tin, tungsten, tantalum and gold) originating from conflict-affected and high-risk areas.

The Regulation aims to prevent that the trade of these minerals directly contribute to finance armed conflicts and/or grave human rights abuses, such as forced labour of mine workers. To this end, the Regulation require EU importers to respect international responsible sourcing standards, set by the Organisation for Economic Co-operation and Development (OECD) in its “Due Diligence Guidance for Responsible Supply Chains from Conflict-Affected and High-Risk Areas”.[2]

1. Companies and Businesses Affected

The Regulation applies to EU-based importers of tin, tantalum, tungsten and gold, whether these are in the form of mineral ores, concentrates or processed metals, provided that certain annual volume thresholds are exceeded. Annex I to the Regulation[3] sets out specific thresholds for most of the covered materials, while the EU Commission has defined the remaining thresholds on 25 June 2020 through a delegated act.[4]

The Regulation does not apply to:

  • EU importers where their annual import volume of each of the minerals or metals concerned is below the provided thresholds;
  • Recycled metals, which includes “reclaimed end-user or post-consumer products, or scrap processed metals created during product manufacturing, including excess, obsolete, defective, and scrap metal materials which contain refined or processed metals that are appropriate for recycling in the production of tin, tantalum, tungsten or gold”;
  • Stocks which were created on a verifiable date prior to 1 February 2013.

Indirectly, the Regulation concerns smelters and refiners of the covered materials, whether they are based inside the EU or not: EU importers will be indeed required to avoid dealing with smelters and refiners whose due diligence practices are insufficient or associated with risks. The EU Commission is expected to establish and keep updated a “list of global responsible smelters and refiners” that are deemed to fulfil the requirements of the Regulation.  

2. Conflict-Affected and High-Risks Areas

The Regulation targets minerals and metals originating from conflict-affected or high risk areas, without being limited to specific geographical locations. The areas considered to be conflict-affected or high-risk are:

  • areas in a state of armed conflict;
  • fragile post-conflict areas;
  • areas witnessing weak or non-existing governance and security, such as failed states;
  • in all cases, areas with widespread and systematic violations of international law, including human rights abuses.

The EU Commission is expected to call upon external expertise that will provide an indicative, non-exhaustive, regularly updated list of conflict-affected and high-risk areas.

While no definitive list has been published yet, EU importers are encouraged to make this assessment themselves based on non-binding guidelines issued by the Commission for the identification of conflict-affected and high-risk areas.[5]

3. Due Diligence Obligations

The Regulation requires EU importers to carry out risk-based supply chain due diligence, defined as an ongoing process through which economic operators monitor and administer their trades with a view to ensuring that they do not contribute to armed conflict or adverse human rights impacts.

In practice, EU importers have to comply with five main obligations provided by Articles 4, 5, 6 and 7, which explicitly recall the five-steps framework established by the above mentioned OECD Due Diligence Guidance. EU importers of the covered minerals and metals should:

  1. Establish a strong management system and clearly communicate to suppliers and the public their policy, which includes engaging with suppliers to integrate these standards in their supply contracts and develop a traceability system for imported minerals (Article 4);
  2.  Identify and assess actual or potential risks in the supply chain, as defined in Annex II of the OECD Due Diligence Guidance (Article 5 (1) (a));
  3. Design and implement a strategy to respond to the identified risks in order to prevent or mitigate adverse humanitarian and human rights impacts (Article 5 (1) (b));
  4. Carry out independent third-party audit of the company’s activities, processes and systems used to implement supply chain due diligence, in particular regarding the due diligence practices of smelters and refiners (Article 6);
  5. Publicly report on supply chain due diligence policies and practices, both to member state authorities and also publicly, and they are obliged to make related information available to their customers (Article 7).

4. Implementation

According to Article 10, the enforcement of the Regulation will be up to the EU member states, which are expected to designate one or more competent authorities responsible for the application of the Regulation. Competent authorities will carry out appropriate ex-post checks of how EU importers comply with the regulation, which includes audits of records as well as on-the-spot inspections (Article 11). In any case, it is worth recalling that the Regulation will enter into force on 1 January 2021.



[3] ANNEX I “List of minerals and metals within the scope of Regulation (EU) 2017/821 classified under the Combined Nomenclature”



by Luca Albertoni, Direttore Cc-Ti

The initiative that we will vote on November 29 is presented as “for responsible multinationals”, but it is actually called “for responsible business”.
A difference that should not be underestimated and that should make you think deeply, because it means that the additional rules would not be imposed only to some giants, frequently considered as “unsympathetic”, but to all Swiss companies active directly or indirectly in the international arena. This includes small and medium companies.

The figures speak for themselves: there are at least 80’000 Swiss companies potentially involved at an international level, among them 5’364 in Ticino. This data has been highlighted by the Federal Council and not contested.
It would be therefore an important percentage of Swiss and Ticino economy which will be confronted with the application of the irrational supplement of rules foreseen by the initiative. For example, we cite the presumption of guilt. Violations would no longer have to be proven by those who invoke them, but there would be an obligation for the companies involved to prove their innocence, even if they are pure allegations. Assumptions that would result in incalculable reputational, regardless of the outcome of the proceedings. Damages based on simple accusations and, for the vast majority of cases, never really materialized to judicial authorities.
No one, the economic world of our country first and foremost, intends to support those who do not respect human rights or the environment, an indefensible attitude. But it is precisely the excellent international reputation of Swiss companies (or companies based in Switzerland) that has amply demonstrated that this sensitivity is already very much felt and taken on board today. All those who betray this human and corporate seriousness have to sentence their own mistakes and have to respond according to the rules of the host country, as it is already the case today. We do not need other rules.

Those who operate internationally are currently, and already long ago, confronted with a whole series of complex and strict rules, both for their activities on a national and international level. An example: the gold refinery sector, which is very present in Ticino, often criticized and arbitrarily accused, is a sector that must submit to dozens of very strict rules and it is considered at the forefront of both environmental and social sustainability.
If, as provided in the text of the initiative, Swiss companies would be declared responsible not only for the conduct of the companies directly employed and controlled by them, but also for those companies that are associated with any business relationship, it is well understood how this constraint would make most of the collaborations impossible, as controls of this kind are absolutely impractical.

Another example: bear in mind that an iPhone has about 10’000 components and 40 raw materials, with suppliers for each category that can vary depending on the markets and therefore, often, even daily. The same characteristics also apply to many Swiss industrial products.
In turn, the suppliers have their own chains, even those often located in the international area.
The immense difficulty of the continuous search for feedback in the dense network of business contacts shows that the application of the initiative would only be an additional obstacle for Swiss companies (and only for our realities), not resolving or alleviating any problems related to the protection of human rights and the environment.

The counter-proposal of the Parliament, which would come into force in case of rejection of the initiative, constitutes in fact, a sufficient additional restrictive legal basis, which puts Switzerland ethically at the forefront of the world.

The popular vote on the Responsible Business Initiative will take place on November 29, 2020.

Here below you will find the video by STSA, in cooperation with LCTA and ZCA. The video is now available on public transport around Switzerland. Watch it and help us by sharing it on social media, with your employees and contacts.

In Italian

In German

In French

Florence Schurch
Secretary general of STSA, is at your disposal to answer your questions:
+41 22 715 29 90 /

The popular vote on the Responsible Business Initiative will take place on November 29, 2020 and the campaign will start this summer. On that date, the Swiss people will be able to vote for or against the initiative.
If the population accepts the initiative, it would still have to be implemented on a statutory level. If the initiative does not reach the majority of votes, the indirect counter-proposal will be adopted (subject to a referendum). The reporting and due diligence obligations would then need to be observed for the first time in the financial year commencing one year after the entry into effect.

KKS counter1. Key elements of the Initiative-proposal

The RBI seeks to introduce a new article 101a to the Federal Constitution. This article proposes the following key requirements for companies with registered office, central administration or principal place of business in Switzerland (Swiss companies) :
– Respect all internationally recognized human rights and international environmental standards in Switzerland and abroad and ensure that companies under their (actual) control do the same.
– Conduct appropriate due diligence with respect to risks to human rights and the environment by identifying actual and potential impacts, take measures to prevent and cease existing violations, and report on such measures. These obligations extend to controlled companies (subsidiaries and suppliers).
– Accept liability for damage caused by companies under their control by violation of internationally recognized human rights and international environmental standards in the course of business, unless they prove to have complied with their due diligence obligations (reversal of the burden of proof).

The Swiss Parliament supports the main goal of the initiative that is the respect for human rights and the environmental through business, but concluded that the initiative went too far and would significantly weaken the attractiveness for Switzerland as a business hub. Instead, it supports the indirect counter-proposal.

2. Key elements of the indirect counter-proposal

Non-financial reporting duties

A new proposed provision in article 964bis ff. of the Swiss Code of Obligations would require public companies, banks, insurance companies and other supervised companies in the financial sector, which together with controlled companies in Switzerland and abroad (the Group) :
(i) have at least 500 full-time employees on annual average, and
(ii) exceed either total assets of CHF 20 million or revenues of CHF 40 million, to report annually on non-financial matters in a separate report.
These provisions are in line with the Non-Financial Reporting Directive of the EU.

The report must contain information necessary to understand the Group’s business development, performance, position and impact of its activity on environmental (incl. CO2 targets), social, employee, human rights and anti-corruption topics. The report has to include but is not limited to a description of :
(i) the business model,
(ii) policies pursued and due diligence carried out,
(iii) main risks resulting from the Group’s own operations and, where relevant and proportionate, from its business relationships, products or services,
(iv) measures taken and assessed, and
(v) the main non-financial key performance indicators.

The report may be based on national, European or international reporting standards, such as the OECD guidelines for multinational enterprises or the standards of the Global Reporting Initiative (GRI) among others. A reporting company may choose not to report on topics with respect to which the Group does not pursue policies. This would, however, require the report to provide a clear and reasoned explanation. Furthermore, the report is subject to approval by the board of directors and by the general meeting of shareholders but it does not need to be audited.

Due diligence obligations in connection with conflict minerals and child labor

Swiss Companies that (i) import or process minerals or metals containing tin, tantalum, tungsten or gold from conflict or high-risk areas, or (ii) offer products or services where there are reasonable grounds to suspect that child labor was involved, are subject to special due diligence and related reporting obligations with respect to their supply chain. The Federal Council may define certain exceptions.
Companies would be required to implement a management system with a defined supply chain policy and a system to trace back the supply chain, identify and assess actual and potential risks of adverse impacts in their supply chain, implement a risk management plan with measures to prevent or mitigate such risks, and issue an annual report on the compliance with these obligations. Additionally, companies importing or processing minerals or metals must appoint an independent third party to carry out audits on the compliance with the abovementioned obligations.

As far as criminal liability is concerned, the proposed provisions foresee that anyone who makes false statements in, or fails to provide, a required non-financial report will be fined with up to CHF 100’000.

Florence Schurch
Secretary general of STSA, is at your disposal to answer your questions:
+41 22 715 29 90 /

Contribution by AXA.

For AXA this year 2020 represents a new challenge. Since June 2019 we have enlarged our team by hiring Simona Busetti who is responsible for broker management in the Italian market. Since the beginning of the year, for the first time in Ticino, we also have a dedicated credit underwriter, Andrea Pugliatti, focused on the analysis of Italian risks and, in general, the Ticino market.

This move on our part will bring added value for our customers, who will now have a key reference point for the analysis of debtors directly in Lugano. With Andrea, we will be able to offer our clients even more personalized and high-value advice.

In terms of market environment; at a global level, after years of stability, we see a stagnant economy, with an expected growth of 2.5% of GDP compared to 2.4% in 2019 (source world bank). For Italy,  growth expectations for 2020 were +0.2%, which currently seem unlikely given the impact of the coronavirus, which is leading Italy into a technical recession (government source).

The steel sector in Italy, but also in Europe, is being significantly impacted by:

– the US-China tariff war, strengthening the influx of Chinese products into the EU  despite the clauses established by the EU Commission to prevent this,

– the strong increase in raw materials used in the sector, from iron ore to coke

– overcapacity for already high inventories

– ILVA affair, where ArcelorMittal has created, and is still creating, difficulties for the industrial sector , especially mechanics.

Steel production in Italy, after a good 2018, suffered a contraction in 2019 of -4.1%, driven by the crisis in the automotive sector and the static demand for rebar, against a global production growth of 3.9%. Demand remains compressed for coils and carbon steel sheets, mainly due to low import prices from Turkey. The latter is contributing on several fronts such as the drop in nickel prices since the end of 2019.

In Europe, insolvencies, after a stagnant period, increased again by 2% on average, with some countries improving and some stable countries such as Italy. One of the key factors for the slow recovery of the Italian economy is certainly linked to political uncertainty and the lack of reforms.

This excludes the potential impact of Coronavirus on the health of Italian and other European companies with supply and order problems, which will emerge in the next months/years.

AXA’s commitment in trade credit insurance remains strong and will continue to develop its offering and risk analysis services in its current key markets; Switzerland, Italy, Germany, Spain, Morocco and Singapore.

This year the Lugano Commodity Trading Association (LCTA) celebrates its 10th anniversary. LCTA is a non-profit organization that brings together operators active in the commodity trading, shipping, insurance and financing of this sector. In order to comment on the growth and evolution of the association, we interviewed the president, Thomas Patrick.

What has LCTA done for the commodity trading industry over the years?

LCTA originally formed in 2010 as an association of 8 members all active in the commodity sector with an initial primary goal to improve the understanding of the economic contribution made by the commodity trading in Ticino. Commodity trading does not have brand name recognition and as such does not depend on advertising as a marketing medium to sale products; which makes the sector uniquely private. Commodities companies are rarely listed (Glencore being an exception) with the majority privately owned and often including management as shareholders. Other stakeholders include the banks, insurance companies, ship brokers, warehousing agents and forwarding agent, without which the industry could not operate. The business knowledge base is vested in these partner companies and organizations which operate confidentially given the complexity and specialty nature of operations managed by commodity traders. Brand awareness being absent, the companies must discern themselves through service quality and risk management skills critical to the sustainability in the commodity sector. It is not common for commodity companies to trade together due to the sensitively to sharing market price and customer information, which is where LCTA enters as an important channel for communication within the commodity sector. LCTA has established a common voice for its members that can be more clearly understood when representing the sector before local, regional and federal authorities.

So, is LCTA also involved in training?

Sure. A highly developed skill set is necessary to efficiently and safely move commodities through the supply chain, which is dependent on professionals more than plant and equipment. LCTA organizes a series of annual training modules or courses open to members staff to extend or tailor their operational knowledge. Moreover, LCTA offers a scholarship to at least one candidate enrolled in the University of Lucerne’s Advanced Studies for Commodities Professionals course (CAS), organized in collaboration with LCTA and the Zug Commodity Association. The investment in skills development and higher education focused on commodities is central to the importance that professionals play in the success of the commodities business.

How LCTA has evolved over the last 10 years?

As mentioned, LCTA formed in 2010 with 8 founding members. Today’s membership has increased to 55 spanning a wide business range including: energy, gains and metals trading; precious metals refining; insurance and banking; and shipping and materials handling.

There is a significant concentration of companies active in the commodity sector in both Geneva and Zug, represented by respectively by the Swiss Trading & Shipping Association (“STSA”) and the Zug Trade Association (“ZTA”). In 2015 STSA established itself as the umbrella association for the entire Swiss commodities sector, LCTA and ZTA joining as Institutional Members. This was an important development given the need to collectively confront matters at the Federal level, with STSA best positioned to address.

How important is the commodity trading for canton Ticino?

The private character of the commodities companies makes it difficult to fully assess the economic contribution made collectively by the business active in the sector. In Ticino, we estimate that there are approximately 120 companies active in the commodities with around 75 million Swiss francs in tax revenue and provide an important contribution to the Canton’s GDP. In the international context, Switzerland is the world’s biggest commodities trading hub. Its global market share is estimated at 35% for oil, 60% for metals and 50% for sugar and cereals respectively. Some of the world largest companies are commodity trading firms domiciled in Switzerland. The importance of the sector in the safe and efficient global movement of goods should not be understated.

After more than a decade of globalization that promoted open markets and reduced trade barriers, the current movement is marked by the challenge of protectionist actions and retrenchment to nationalist policies invoking tariffs and quotas that are complex for commodity traders to navigate. The role of the commodity trader remains essential for moving goods and managing all the risk involved, but the difficulty of managing today means fewer small companies can survive. It is less about trading and more about shipping and storage of goods, payment risk mitigation, and capacity to finance an extended supply chain. This makes LCTA and its affiliate associations more important as a place where information can be shared between members and skills developed to meet the challenges of a changing marketplace.

What is your wish at LCTA for its 10th anniversary?

This is LCTA’s 10th year anniversary, which unfortunately is marked by the most threatening public health scary of our lifetimes. While there is no doubt that we will survive the health crisis, it is likely that the “new normal” will reflect a change in behavior both personally and professionally. I am an optimist by nature and believe that the changed behavior will be for the better not worse. For LCTA I believe and hope that the association will be made stronger platform and provide a more forceful channel for information sharing among its members, as well as a stronger voice to educate the public on the importance of the sector in moving basic goods from the source of origin or production to the point of consumption.