Article by Alberto Genovesi, Chairman and Marco Moschen, Vice Director, Fidinam & Partners SA

Photo by Cameron Venti

On February 24th, 2021 the Swiss federal government launched a consultation procedure in order to evaluate the draft law on tonnage tax.

More than 90% of goods manufactured worldwide is shipped at least once and Switzerland is such an attractive and efficient location for shipping that Swiss based companies manage the 9th merchant fleet in the world and the 4th in Europe, with more than 900 vessels. In this peculiar ranking, all other better-placed (but not only) countries provide for a tonnage tax or other shipping incentives regimes, while currently in Switzerland, and especially after the last tax reform, profits form shipping activities are taxed ordinarily. This is why the above-mentioned draft law aims to grant a competitive tax environment, compared to other countries, but it could also foster incorporation of shipping newcos and/or relocation in Switzerland of existing ones.

Indeed, at international level, profits from the operation of ships are taxable where the enterprise is tax resident.  In other words, this is where the place of its effective management is located. Now, the dynamism of this kind of multinational enterprises is well-known and relocating the place of effective management would not be that difficult. Furthermore, shipping companies in Switzerland can benefit from synergies with excellences in commodity trading, considering the Swiss leadership in this field.

According to a 2020 survey by the University of Lausanne (CREA Institute), countries where a tonnage tax has been implemented had an average raise in tonnage greater than 160%, during the 10 years following the implementation. According to specific estimates regarding the Swiss market, the same survey refers about potential additional CHF 180 million in tax and social security contributions coming from additional 3’200 new direct jobs, compared to an alternative without tonnage tax.

Who is impacted by tonnage tax?

According to the Swiss draft law,any enterprise, regardless of the chosen legal form (i.e., limited companies, individual companies, etc.) operating maritime vessels can benefit from tonnage tax, subject to certain conditions as follows.

What does it affect, exactly?

Tonnage tax would affect profits from operating (and/or selling) a vessel used for: freight, passengers, rescue, setting of pipes and cables, off-shore special purposes, scientific research and profits from related activities on board as well, provided that they do not exceed 50% of the total profit form the vessel.

How does it affect?

According to the Swiss draft law, tonnage tax provides for an alternative method of calculating the taxable net profit. Not the ordinary P&L accounting method, but a forfeit based on the net tonnage of the vessel, multiplied by a decreasing tariff and actual exercise days during the tax period:

Each 100 NT up to 1’000 NT: 1.09 CHF per day

Each additional 100 NT up to 10’000 NT: 0.80 CHF per day

Each additional 100 NT up to 25’000 NT: 0.52 CHF per day

Each additional 100 NT above 25’000 NT: 0.26 CHF per day

The amount calculated thanks to this method is then taxed applying the ordinary federal and cantonal tax rates on enterprise profits.

The taxable base can be further reduced, up to 20%, if the propulsion systems of the vessel meet some ecological standards, that will be duly defined by the ordinance to the law. 

No matter how profitable the business is then, tonnage tax remains unchanged. That would be clearly attractive for profitable enterprises and from a business planning perspective as well.


Tonnage tax would apply on a voluntary basis only, upon request by the tax payer (ordinary taxation would apply otherwise).

The application can be “per vessel”, or rather, there is no obligation to apply for the entire fleet. If the tax payer applies only for some vessels and/or it carries out other activities (subject to ordinary taxation), the enterprise must keep analytical accounts.

If the application succeeds, the tonnage tax option would last 10 tax periods and can be renewed. The taxpayer can renounce to the tax option before the end of the above-mentioned 10 periods, but in that case, it cannot apply again, before a 6 years lock-up period.

In order to be eligible for tonnage tax, at least 60% of the fleet tonnage managed by the tax payer must sail under Swiss or European Economic Area (EEA) flag, on the last day of the tax period.

A tonnage tax could be a real game changer in the history of Swiss shipping and commodity trading, therefore for the Swiss economy as a whole. In light of that it is crucial to have a public debate on the topic and not to waste a once in a lifetime opportunity.

Waiting for a favourable development of the consultation procedure, in Switzerland we are ready to assist existing enterprises with the conversion to tonnage tax and to welcome new enterprises choosing our country as first-class location for shipping and commodity trading.

Alberto Genovesi
Fidinam & Partners SA
Marco Moschen
Vice Director
Fidinam & Partners SA

Since 2018 the Lugano Commodity Trading Association (LCTA) offers every year a scholarship opportunity for the CAS Commodity Professional (next edition: 6 May 2021).

Study content

Commodity trading and related services have grown significant in the Swiss economy, and they are expanding even further. These companies are in search of talents.

In cooperation with the Lucerne University of Applied Sciences and Arts, the Lugano Commodity Trading Association (LCTA) and the Zug Commodity Association (ZCA) offer a certificate of advanced studies CAS for commodity professionals. The certificate programme will provide attendants with a thorough understanding of the commodity industry and its characteristics. The course work will provide students from the commodity sector with detailed skills, students from commodity service providers the ability to better understand their clients, and give all graduates tools to enhance their careers. The CAS Commodity Professional combines theoretical know-how with hands-on learning experience provided by accomplished guest speakers. This programme prepares the participants to take on management or specialist functions within the commodity industry.

  • Basics of Commodity & Geopolitical Dynamics
  • Commodities within the value chain
  • Shipping and Transport
  • Trade Finance
  • Basics of Risk Management
  • Legal Aspects and Compliance

Scholarship amount: CHF 9,800

Application requirements:

To apply to the LCTA scholarship, applicants must fulfil the following criteria:

  1. Employee of a company, which is member of the LCTA
  2. Tertiary education (as minimum level)
  3. Good marks in the previous educations
  4. Multi language. In particular, good knowledge of the English language (fully taught in English)
  5. International skills
  6. Letter of reference from the employer or from a key-person in the commodity trading sector

The scholarship is granted if the following conditions are fulfilled:

  • The student is required to have an 80% attendance at the lessons
  • The student has to pass all the exams
  • The student has to carry out a research on a topic related to the Lugano commodity trading hub (defined by the board of the LCTA)

Update and more info at this link

Please send your application documents by our email:

Published on March 9, 2021 – translated in English by LCTA

Ticino is experiencing good growth in the commodities trading sector. What are the characteristics that enable this trend?

Many characteristic elements of the “Swiss System” are fundamental for the sector, to name just a few: political stability and legal certainty, tax conditions and a banking system that is traditionally active in the commodity trade finance. In the leading cantons in terms of intensity of activity in the sector, these aspects are complemented by the availability of skills, which mainly stems from historical reasons, from the establishment over time of some companies that have subsequently become leaders in their respective markets. The consequent ability to attract talent and subsequent spin-offs have created a virtuous circle in the most active cantons – and Ticino is no exception – that has led us to the data published in recent days.

Your association is committed to this growth. What are the main initiatives you plan to take in the future to support the sector?

The virtuous circle I referred to earlier must be supported and nurtured so that it continues to create value and growth. LCTA has been active for ten years, during which we have been committed to training new human resources and offering continuing education opportunities to those already employed. In parallel, the association carries out continuous communication with stakeholders and promotion activities to foster the development of new relationships and keep the soil fertile for the establishment of new businesses and the growth of existing ones. We will of course continue with these activities and are gearing up for new challenges. Competitiveness will also depend on new factors; there will be technological aspects and process efficiency on which we will have to work as a sector, in a coordinated manner, involving players at different levels of our supply chains. The cantonal trade associations, and STSA at federal level, are the right places to address these issues and develop solutions that will allow the “Swiss System” to remain at the top of the world.

It is said that this type of business is ‘volatile’. Is this true?

It depends on the noun to which you attach the adjective ‘volatile’. If we talk about the more speculative aspects fundamentally linked to financial markets, we would have to open a long debate, but commodity trading at international level is probably one of the oldest activities that still takes place on a large scale, and it has basically remained unchanged over the centuries. I would add that the largest companies in the sector have a fair amount of longevity, so all in all it is a pretty solid and traditional business, serving basic needs such as the supply of materials that are often essential for survival. It is essential, to be successful, to have the tools to deal with the volatility of the markets in which we operate. One of the essential tasks of trading companies, especially in certain commodities, is to absorb volatility and absorb its effects along the supply chain so that they do not amplify. Precisely in order to fulfil this and other tasks of coordinating activities within the supply chains of which we are part, trading companies must have a solid foundation, risk management skills and the cyclicality of the markets.

What kind of jobs have been created in Ticino?

LCTA, in collaboration with its cousins in the Zug Commodity Association (ZCA), has created a post-graduate training program to make up for the lack of university courses dedicated to international commodities trading, thus favoring the training of highly qualified young people and the further growth of people already working in the sector.  Our basic training continues to train staff in a multidisciplinary manner. In addition to this, we work to make the environment more attractive, so that we can complement local talent with talent from abroad and further enrich our companies with experience. In recent years, in any case, the professions that have come to Ticino range from the trader to the logistics or insurance expert, from the person dealing with the financing of raw materials to those who have made IT their focal point of development, from the pure mathematician to the meteorology expert. These are skilled jobs, involving the most disparate (sometimes surprising) disciplines and normally well paid.

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

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 (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 /