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19 Jan 2023

Public Eye

Switzerland: Public Eye calls for commodity market supervision & fair redistribution of excess profits made during pandemic & war in Ukraine

War and crises – and commodity traders are making record profits

According to the World Bank, the impacts of the pandemic and the war in Ukraine pushed up to an additional 95 million people into extreme poverty in 2022. At the same time, the current uncertainty in terms of energy supply has pushed the prospect of a shift away from fossil fuels even further out. In contrast, a small group of companies is proving not only resilient, but extremely profitable through these times of crisis – commodity traders. 

Traders of oil, gas, coal, wheat or corn are directly profiting from increasing demand, higher prices and massive fluctuations on commodity markets...

The Covid-19 years of 2020 and 2021 already saw an increase in profits for most traders. These secretive companies which carry out most of their trading business in Switzerland, did even better in the first half of 2022, achieving record profits. In the financial year from June 2021 to May 2022, the world’s largest agricultural trader Cargill, whose global trading and freight business is headquartered in Geneva, increased its profits by 141% compared to the average prior to the Covid-19 crisis...

One commodity trader however outpaced all others with its rising profits: Glencore... [I]n 2021, the company once again made nearly USD 5 billion in profit. This is an increase of a full 661% as compared to the pre-pandemic average...

Yet who really benefits from this giant flood of money? The traders’ secrecy is an integral part of their business model...

Even those traders that are not headquartered in Switzerland transact a large part of their business here and should be viewed as Swiss traders. The Federal Government takes the same view in «The Commodity Trading Sector Guidance on Implementing the UN Guiding Principles on Business and Human Rights»...

Despite the supremacy of this sector there are few official figures available about Switzerland’s commodities hub...

In addition to this, neither companies nor the Federal Council or Parliament have yet shown willingness to provide reliable statistics for example on Switzerland’s share of global trade in commodities...

For years, Public Eye has shone a spotlight on issues associated with the commodities sector, such as cases of corruption or money laundering, human rights abuses, dubious tax deals, the sector’s contribution to the climate crisis or to difficulties in implementing sanctions. In light of these grievances and the growing economic relevance of the sector, it is astounding that neither the Swiss government nor the Parliament are showing meaningful efforts to appropriately regulate the sector...

The laws or regulatory efforts in Switzerland are in no way commensurate to the risks in the commodities sector. The growing economic significance and huge profits that Swiss traders are making in the global crisis renew the need for broad regulation of the sector.

Therefore, Public Eye is calling on: 

The Swiss Government and Parliament 
  • To advocate within the framework of the OECD/G20 and the UN for a fair, global taxation policy that prevents profits from being moved to home states to the detriment of resource-rich countries. 
  • To refrain from tax privileges for commodity traders, such as the tonnage tax, and rather, in the case of so-called war profits, to introduce a windfall tax for the commodities sector and provide for fair redistribution.  
  • To improve transparency in the commodities trading sector in Switzerland, in particular by regularly publishing relevant and comprehensive statistics. 
  • To introduce a comprehensive due diligence requirement in the field of human rights and the environment for all companies based in Switzerland, including commodity traders, that goes well beyond the currently applicable provisions. 
  • To create the statutory regulations and set up a corresponding authority to provide oversight of the commodities sector, including the oversight of compliance with due diligence requirements and sanctions for relevant breaches. 
Swiss commodities traders and industry associations 
  • To improve transparency in relation to company structures, business results, activities in Switzerland, market share and tax payments. 
  • To fully embed in corporate structure and implement comprehensive systems and processes of due diligence on human rights, environment and climate, money laundering and corruption, especially reporting on, preventing and remedying identified risks and violations.