What role does Switzerland play in the commodities trade?
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Switzerland, as a major hub for the commodities trade, could use its position to influence this sector and steer it towards greater sustainability, according to a recent academic report.
Commodity trading offers economic opportunities but also harms the environment, highlights the Swiss Academy of Sciences (SCNAT). International trade alone affects nearly a third of threatened animal and plant species and accounts for around a quarter of water consumption.
Switzerland plays a significant role in this trade. It is home to some of the world’s leading trading companies. It serves as a hub for the global trade in copper, aluminium, ore, vegetable oils and even crude oil.
Given its position, Switzerland can play “a catalytic role in promoting a more coordinated approach among trading centres”, notes the SCNAT press release. In recent years, the commodities trade has undergone a massive transformation. It has become excessively financialised, according to the report.
Extract from our archives (enable subtitles in the bottom right corner): Switzerland, a major player in commodities
And banks are not the only players involved. Trading firms have also entered this market and have become genuine financial intermediaries that derive a significant portion of their revenue from derivatives, the report’s authors stated at a press conference in Bern.
However, this development comes at a cost. Financialisation increases price volatility. In the event of financial crises, for example, the repercussions on the commodities trade can be devastating, causing energy or food supply problems for certain countries.
Currently, regulatory provisions are fragmented. Each trading hub has its own guidelines, which limits the impact of measures taken to promote more sustainable trade. Regulations primarily concern trading activities, but not the commodities being traded.
National or regional sustainability regulations for trading companies include, in particular, the prohibition of forced labour, the ban on minerals from conflict zones, and goods produced through deforestation. Measures are also being taken to combat money laundering.
Consistency and coordination
According to the report, the priority in the commodities trading sector should be the establishment of consistent and uniform regulation. It would also involve ensuring greater product traceability. In this area, most of the relevant data is currently held by private companies.
Switzerland, as a major centre for commodity trading, could encourage this harmonisation by taking a proactive stance. However, the report, the result of work by some 30 economic, environmental and social experts, is careful not to make direct recommendations.
Translated from French by AI/ts
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