Swiss non-governmental organisations are optimistic that internal and external momentum will lead to reforms of the commodities sector, despite the voluntary nature of the government’s recent white paper.
“I wouldn’t describe it as a defeat at all,” said commodities/human rights specialist Urs Rybi of the Berne Declaration, a Swiss non-governmental organisation that favours more regulation of Switzerland’s fast-growing industry.
“It’s just [a] first step of many. If we’d already got concrete, binding regulations as an outcome of this process it would have been an incredible surprise.”
On March 27 the government released a long-awaited white paper listing 17 recommendations aimed at reinforcing existing standards and supporting international efforts to increase transparency in the Swiss commodities sector, without pushing for unilateral action.
The clear message was that Switzerland needed to protect its competitive edge. The small alpine nation is home to around 500 commodities firms, including giants Glencore, Cargill, Vitol and Trafigura. The industry’s 10,000 employees contribute around 3.5 per cent to national GDP – more than the tourist industry.
If campaigners are not convinced the Swiss recommendations will go far enough to put a stop to firms’ dealing with dubious regimes, or lead to greater transparency of financial transactions, they at least remain certain that further regulation is in the pipeline.
“Even if certain departments and lobbies want to put the brakes on, people like former UN Special Rapporteur on Human Rights and Business John Ruggie [the driving force behind the UN Guiding Principles on Human Rights and Business adopted in June 2011] and the US and EU are moving towards measures calling for greater transparency and human rights. It’s an unavoidable evolution,” said Chantal Peyer from the NGO Bread for All.
Peyer and her colleagues are also encouraged by two important moves by the Swiss parliament that could bring about change at other levels.
In December 2012 the House of Representatives called on the government to draft a national strategy to implement the so-called “Ruggie Rules” - guidelines to strengthen the human rights performance of businesses around the world. A report is due by the end of 2014.
Swiss government white paper - highlights
“Switzerland should continue efforts to ensure that overall political, economic and legal conditions make it an attractive and reliable location for doing business in all sectors, including the commodities industry.”
“Switzerland should actively support the discussion in the OECD on possible ways of curbing tax avoidance and review implementation of the results in Switzerland.”
“Switzerland should strengthen its commitment to the Extractive Industries Transparency Initiative (EITI).”
“Switzerland should continue to actively promote international initiatives for increasing the transparency of product flows – such as the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas – and should implement the standards adopted. In addition, Switzerland should launch this year, as planned, the “Better Gold Initiative” for the creation of a value chain for the fair and sustainable extraction and trading of gold.”
“A working group, in cooperation with representatives of the stakeholders involved (cantons, as well as companies and NGOs) should prepare proposals for corporate social responsibility standards (including implementation mechanisms) for the commodity trading industry.”
NGOs argue the government report is incoherent as the cautious measures proposed do not match its frank analysis of sensitive issues like corruption, human rights risks and sanctions.
It also sidesteps important questions like tax, speculation on raw materials and access to justice for victims of human rights abuses carried out by Swiss-based firms.end of infobox
Countries such as the United States, Britain, Germany, the Netherlands and Denmark are already quite advanced on national action plans to implement the UN principles and are looking at issues like “thresholds of reasonableness” – how much and what kind of human rights due diligence is enough.
“A strategy to implement the Ruggie guidelines will act as a catalyst and enable a more coherent government approach as each department will have to explain their strategy on specific issues,” said Rybi.
Activists also welcome parliament’s commissioning of a comparative law study on human rights due diligence to see whether further legislation is necessary. This decision was taken in response to the handing in of a petition to the federal authorities signed by 135,285 people last June from the “Corporate Justice” campaign demanding clear legal rules to force Swiss-based firms to observe human rights and environmental standards worldwide.
Alec von Graffenried, a member of the Corporate Justice network and a Green Party parliamentarian, has called for a joint strategy on commodities trading, together with colleagues from across the political spectrum.
“I think more and more parliamentarians are aware that huge volumes are being traded here and we don’t have very good legal instruments to keep control,” said von Graffenried, who plans to file a motion on commodities transparency and financial flows.
Transparency at home
In its white paper the Swiss government says it wants to improve transparency and is considering the preparation of a draft law ensuring the disclosure of all payments to governments by commodities firms.
This follows disclosure rules adopted by the US last year, the Dodd-Frank legislation, that include the logging industry along with mining and petroleum operations, and even stricter new EU rules adopted on April 9 which require oil, gas, mining and logging companies to disclose details of tax, bonus and other payments made for every project they operate, over a threshold of €100,000. The rules apply to all listed and large unlisted companies registered in the EU without exemption.
But campaigners say the structure of the Swiss sector is very different. They are anxious that any new Swiss law covers both extraction and trading activities, which are very important in Switzerland.
“If Switzerland introduced exactly the same transparency law as the EU it would be just window dressing and almost no added value to the people on the ground in resource-rich countries. The devil is in the detail. Switzerland’s real contribution would be to introduce a law that covers the whole sector, both the extraction and trading activities. But my feeling is that the Swiss authorities are more reluctant than the sector itself,” said Rybi.