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.


[1] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32017R0821

[2] https://www.oecd.org/corporate/mne/mining.htm

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

[4] https://ec.europa.eu/transparency/regdoc/rep/3/2020/EN/C-2020-4164-F1-EN-ANNEX-1-PART-1.PDF

[5] https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32018H1149

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 7,900 (CAS tuition fee)

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)

Please send your application documents by 15 March 2021 to:
LCTA, c/o Cc-Ti, Corso Elvezia 16, 6900 Lugano / or by email

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 / florence.schurch@stsaswiss.ch

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 / florence.schurch@stsaswiss.ch

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.

The Responsible Business Initiative: Headstart for the KKS Counter-Proposal in the Conciliation Committee 

Following back and forth consultations between the two Chambers (Council of States and the National Council), and with differences still remaining between both of them following the three votes, a Conciliation Committee was formed on June 4. After a fast discussion (only 45 minutes), the Conciliation Committee voted for the KKS counter-proposal with 15 to 11 votes.

This decision taken by the Conciliation Committee was then submitted for a vote to the National Council on June 8 and on June 9 to the Council of States.

  • The National Council accepted the decision of the Conciliation Committee in favour of the KKS counter-proposal with 99 to 91 votes and 6 abstentions.
  • The Council of States voted in favour of the KKS counter-proposal with 28 to 14 votes and 2 abstentions.

Therefore, the popular vote will take place on November 29, 2020 and the campaign will start this summer. This vote will be preceded by the popular vote of September 27 on the free movement of people with the EU: “For moderate immigration (Limitation Initiative)”, which may jeopardize the bilateral path Switzerland has taken in its relation with the EU until this day. As a result, until September 27, all national and local trade associations will be dedicated to contest the Limitation initiative.

KKS counter-proposal

The content of the Conciliation Committee’s proposal is in line with international standards. Firstly, the non-financial reporting duty is in line with an EU-Directive and the standards have been adapted to the conditions in Switzerland. Secondly, an additional due diligence requirement specific to risks associated with child labour in the value chain and trading of conflict minerals was introduced. These requirements go further than the current international standard and only the Netherlands have already implemented a regulation with similar content. As far as liability is concerned, the Conciliation Committee’s proposal adheres to the existing and internationally recognized liability provisions and eliminates any newly proposed liability provision, ensuring legal certainty (no reversal of the burden of proof).

Responsible Business Initiative

The initiative calls for the creation of a new liability provision of parent companies (large companies and SMEs in high risk sectors, such as mining and commodity trading) for wrongful acts of a controlled company (subsidiaries and suppliers) abroad. The catalogue of rights includes all internationally recognized human rights and environmental standards. The concrete consequences of such a liability provision, which would be unique internationally, are very difficult to foresee in detail. The initiative would increase legal uncertainty and; as a result, it will also endanger jobs, not only in Switzerland but also abroad. If a subsidiary of a Swiss parent company violates human rights, victims can directly sue the parent company in Switzerland for damages. To this end, the injured parties must be able to prove in court the damage suffered, its unlawfulness and an adequate causal link. If they succeed in doing so, the Swiss parent company would still have the possibility to free itself from liability, if it can prove that it has exercised all due diligence to avoid this specific damage (reversal of the burden of proof). In addition, Swiss courts would have jurisdiction in the event of liability claims, regardless of the existence of effective remedies in another country with a closer connection to the facts and a recognized legal system.

Florence Schurch
Secretary general of STSA, is at your disposal to answer your questions:
+41 22 715 29 90 / florence.schurch@stsaswiss.ch

On March 25, the Federal Council adopted an emergency ordinance on granting of credits with joint and several federal guarantees. Bridging credit facilities representing a maximum of 10% of their annual turnover and no more than CHF 20 million. 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.
Credit application form: covid19.easygov.swiss


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.

Dear Members of LCTA,

we would like to inform you that in March/April we received several emails and phone calls from LCTA members complaining that the measures implemented by the Swiss Confederation discriminate against trading companies. On the one side, discrimination on the access criteria; on the other side, discrimination on the criteria to establish the amount to be assigned.

Access Criterion

In fact, the “emergency ordinance on granting credits with joint and several federal guarantees” adopted by the Federal Council is discriminating against small trading companies that are not big enough to face the crisis alone and that unfortunately are not small enough to be supported by Confederation. Matter-of-factly, companies with a turnover <500 M CHF has no right to be supported by Confederations for these specific credits/guarantees; as you know, we are talking about companies with big turnovers (>500 M CHF), very small margins and not more than 20-30 employees.

Loan Amount Criterion

Also criteria to establish the amount to be assigned to companies (Covid19 credit and Covid19 plus credit) have arisen some doubts regarding the treatment of trading companies. According to the Federal Ordinance (25.03.2020), in the case of trading companies the benchmark for granting a Covid19-loan is turnover, while according to the Swiss Banking Association point 22 of the “SBA Q&A” (as of 02.04.2020) the benchmark is gross margin*. Obviously, for a loan to a company with CHF 30 million in turnover, there is a big difference between 10% of turnover (or CHF 3 million) and the gross margin* (in optimistic cases around 2%, or CHF 0.6 million). In addition, there are general indications or obligations (“it is appropriate or mandatory”?).

It is also a question of consistency: if for trading companies the gross margin criterion is used instead of turnover, then the access criterion must also be based on the gross margin criterion and not on the turnover criterion. This is a double standard case.

Our association (STSA, LCTA and ZCA) wrote a letter to federal authorities as well as to the Swiss banking association in order do have an official reply. This is an important occasion to remember that not all trading companies are giants and that there is a relevant number of the operators that was and is still negatively affected by this Covid-crisis without having the same rights of other similar companies.

*For the “Commodity Trade Finance” sector, which turnover parameters should be taken into account? (New question published on March 31, 2020): Traders in principle have high turnover figures. The use of annual turnover as a benchmark could therefore result in disproportionate amounts of credit being granted. In order to comply with the actual purpose of the transitional credit programme, the gross margin / gross trade margin should therefore be used. The gross trade margin is also used to cover salary costs and fixed and variable expenses.