Switzerland's Corporate Due Diligence Obligations: What Commodity Traders Must Comply With

The Legislative Background: The Responsible Business Initiative and Its Aftermath

The legislative foundations of Switzerland’s current commodity trader due diligence obligations trace to a heated political battle that concluded in November 2020. The Responsible Business Initiative (Konzernverantwortungsinitiative, KVI) proposed constitutional amendments that would have made Swiss parent companies legally liable for human rights and environmental violations committed by their subsidiaries and suppliers worldwide. Had the KVI passed, a Swiss-headquartered commodity trading house could have faced direct legal liability in Swiss courts for violations occurring in its supply chain — in DRC copper mines, West African cocoa farms, or Brazilian soybean operations.

The initiative was rejected by a narrow majority of Swiss cantons, though it won a popular majority. The constitutional rule requiring both a popular majority and a cantonal majority meant the initiative failed, but its near-success compelled the Federal Council to implement its own legislative response — the indirect counter-proposal known as the Gegenvorschlag.

The Gegenvorschlag, which entered force in January 2022 with reporting obligations effective for financial years beginning 2024, established mandatory non-financial reporting requirements that fall short of the full liability regime proposed by the KVI but nonetheless impose significant compliance obligations on large Swiss companies, including commodity trading houses.

Understanding these obligations — and how they interact with international standards and the EU regulatory framework — is essential for any company operating from Switzerland in the commodity trading sector.

What the Gegenvorschlag Requires

The Swiss Gegenvorschlag establishes two distinct but related sets of obligations: a general non-financial reporting requirement and specific due diligence obligations for conflict minerals and child labour.

Non-Financial Reporting

Large companies incorporated in Switzerland must publish an annual non-financial report covering environmental matters (including climate-related information), social concerns, employee matters, human rights, and anti-corruption. The reporting obligation applies to companies that, on a consolidated basis, exceed two of the following three thresholds: CHF 40 million net revenue, CHF 20 million balance sheet, 250 employees on average. For publicly listed companies, the thresholds are lower.

For large commodity trading houses — Glencore (listed), Trafigura, Vitol, Cargill — all easily exceed these thresholds. The non-financial report must be approved by the board of directors and published alongside (or integrated into) the annual report. While the reporting obligation does not itself establish legal liability for supply chain violations, misrepresentation in reports can give rise to reputational and, potentially, legal consequences.

The law does not specify the framework companies must use for their non-financial reporting, but points to internationally recognised standards including the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB) framework, and the Task Force on Climate-related Financial Disclosures (TCFD). In practice, most large Swiss commodity traders align their non-financial reporting with GRI standards and increasingly with TCFD recommendations.

Conflict Minerals Due Diligence

The conflict minerals provisions are more specific and operationally demanding. Companies in scope must implement due diligence processes aligned with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas when sourcing tin, tantalum, tungsten, or gold from such areas.

The OECD Guidance specifies five steps that companies must follow:

1. Establish strong company management systems, including a supply chain policy, a management system to trace minerals through the supply chain, and grievance mechanisms.
2. Identify and assess risks in the supply chain through supply chain mapping and risk assessment against specified risk categories.
3. Design and implement a strategy to respond to identified risks, including risk mitigation, suspension or disengagement from problematic suppliers as appropriate.
4. Carry out independent third-party audits of the supply chain.
5. Report annually on supply chain due diligence, publicly disclosing findings and measures taken.

For Swiss commodity traders with significant exposure to gold, tin, tantalum, or tungsten sourced from the DRC, Rwanda, Zimbabwe, or other designated conflict-affected and high-risk areas (CAHRAs), the conflict minerals obligations require substantial ongoing investment. The Swiss gold refineries — Valcambi, Argor-Heraeus, PAMP, and Metalor — bear the most direct obligations, as the facilities through which raw gold from conflict-prone regions must pass. But the trading companies that source from or sell to those refineries also fall within the due diligence chain.

Child Labour Due Diligence

The child labour provisions require companies in scope that have reason to believe their supply chains may be associated with child labour — as defined under ILO Conventions 138 (minimum age) and 182 (worst forms of child labour) — to implement due diligence covering: identifying and assessing the risk of child labour in their supply chain; taking measures to end or mitigate child labour where found; documenting due diligence measures and outcomes; and reporting publicly on findings.

Unlike the conflict minerals obligations, which are limited to specific minerals from designated high-risk areas, the child labour due diligence requirement applies across commodity sectors where child labour risk is present. This means cocoa (West Africa), tobacco, cotton, and certain agricultural commodity supply chains all fall within scope — relevant for agricultural traders like Cargill operating from Geneva, as much as for metals traders.

Companies in Scope: Swiss AG and GmbH

The Gegenvorschlag’s non-financial reporting obligations apply to companies incorporated in Switzerland as an Aktiengesellschaft (AG) or Gesellschaft mit beschränkter Haftung (GmbH) that exceed the relevant financial thresholds. For foreign companies, the obligations apply to Swiss-incorporated holding companies, subsidiaries, or operational entities — a structure that captures the Swiss-incorporated entities of multinational trading groups.

In practice, this means that Glencore plc (listed on the London Stock Exchange but with its principal Swiss entity Glencore International AG incorporated in Baar), Trafigura Pte Ltd (with significant Swiss incorporated entities), Vitol Group (Swiss entities), and the Swiss subsidiaries of Cargill are all within scope of the Gegenvorschlag reporting obligations.

Companies that are subsidiaries of EU-regulated parents — for example, the Swiss subsidiary of a French or Dutch commodity company — may be partially relieved of duplicative reporting obligations if their parent’s reports cover Swiss operations in sufficient detail, but this relief is conditioned on the parent’s report meeting Swiss law requirements.

The OECD Due Diligence Framework in Practice

The OECD Due Diligence Guidance is not merely a Swiss regulatory requirement — it is the international standard against which commodity supply chain due diligence is assessed globally. Originally developed for minerals from conflict-affected areas, the OECD has progressively expanded its guidance to cover agricultural supply chains, garments and footwear, and the general Due Diligence Guidance for Responsible Business Conduct published in 2018.

For Swiss commodity traders, the OECD Guidance framework means engaging with several practical compliance activities that have no revenue-generating counterpart. Supply chain mapping — tracing the origin of commodities from mines or farms through processing facilities to the trader’s procurement point — is fundamental but technically challenging. A trading house buying copper concentrates through a smelter in China may have limited visibility into the mine of origin, which may itself have aggregated material from multiple sources including artisanal miners.

The third-party audit requirement is particularly demanding. The OECD Guidance calls for independent third-party audits of smelters and refiners in the supply chain, not merely self-assessment. The Responsible Minerals Initiative (RMI) Responsible Minerals Assurance Process (RMAP) is the primary audit programme for tin, tantalum, tungsten, and gold smelters and refiners. Valcambi, Argor-Heraeus, and PAMP are all RMAP-compliant, meaning they have been independently audited against the OECD Guidance requirements — a status that provides downstream trading companies and manufacturers with confidence that the gold they purchase from those refineries has been subject to appropriate due diligence.

Comparison with US Dodd-Frank Section 1502

Switzerland’s conflict minerals regime is often compared with the US Dodd-Frank Act Section 1502, which since 2012 has required US-listed companies to disclose whether their products contain conflict minerals (tin, tantalum, tungsten, and gold) that originated from the DRC or adjoining countries, and if so to report on their due diligence.

The Dodd-Frank requirement applies to manufacturers of products containing these minerals that are listed on US securities exchanges — it does not directly apply to the commodity traders and smelters earlier in the supply chain. The Swiss regime, by contrast, directly covers the commodity trading companies and refineries operating from Switzerland, applying due diligence obligations at the trading and processing level rather than only at the manufacturer level.

This difference in regulatory architecture means that Swiss law fills a gap that US law leaves: the due diligence obligation applies to the companies that actually trade and process the minerals, not only to the downstream manufacturers who incorporate them into products.

The EU Conflict Minerals Regulation, which entered application in January 2021, aligns more closely with the Swiss approach — it requires EU importers of the four minerals from conflict-affected areas to implement OECD-aligned due diligence. For Swiss commodity traders supplying EU customers or importers, compliance with the Swiss regime is effectively a prerequisite for serving the EU market.

The EU CSDDD and Swiss Traders with EU Exposure

The EU Corporate Sustainability Due Diligence Directive (CSDDD), adopted in 2024, significantly expands the due diligence obligations that apply to large companies operating in the EU. Unlike earlier instruments (the EU Conflict Minerals Regulation, the SFDR for financial products) that targeted specific sectors or instruments, the CSDDD imposes general human rights and environmental due diligence obligations across the entire value chain of large EU companies.

For Swiss commodity traders, the CSDDD creates exposure through two routes. First, large Swiss companies with significant EU business — revenues above EUR 450 million in the EU — fall within the CSDDD’s scope as non-EU companies with EU-facing operations. This means that Glencore, Trafigura, Vitol, and Cargill’s Geneva entity, all of which conduct substantial EU commodity trade, will be required to implement CSDDD-compliant due diligence regardless of their Swiss headquarters.

Second, EU-incorporated subsidiaries and permanent establishments of Swiss trading groups are directly subject to CSDDD obligations — amplifying the compliance requirements on the EU-facing portions of their operations.

The CSDDD requirements go meaningfully beyond the Swiss Gegenvorschlag. They cover the entire value chain — upstream supply chains and downstream distribution — not merely specific high-risk minerals or child labour scenarios. They require companies to adopt transition plans aligned with the Paris Agreement. And they establish a civil liability regime in which companies can be sued in EU courts for failing to take adequate due diligence action to prevent or mitigate human rights violations or environmental harm in their value chains.

For Swiss commodity traders accustomed to the more limited Gegenvorschlag framework, the CSDDD represents a significant escalation of compliance obligations, particularly given the breadth of their global supply chains.

Practical Compliance Steps for Commodity Traders

Implementing a compliance programme that satisfies Switzerland’s Gegenvorschlag, the OECD Guidance framework, and the emerging CSDDD obligations requires a structured approach. The following elements are considered baseline for large Swiss commodity traders in 2025-2026:

Supply chain mapping and tier assessment. The company must identify its key commodity supply chains, map them to the level of mine of origin or farm of origin where possible, and assess each segment for relevant risk categories (conflict minerals, child labour, environmental harm, forced labour). For large trading houses with thousands of supply chain relationships, this requires dedicated data management systems and ongoing intelligence gathering.

Supplier due diligence and contractual requirements. Key suppliers — particularly those in high-risk regions — should be subject to enhanced due diligence including site visits, document review, and third-party audits. Procurement contracts should incorporate social and environmental standards, audit rights, and provisions allowing termination or suspension if violations are found.

Third-party auditing. For smelters and refiners in scope, participation in RMAP or equivalent recognised audit programmes is the practical mechanism for demonstrating compliance. For agricultural supply chains, certification programmes (Rainforest Alliance for cocoa, Round Table on Responsible Soy (RTRS) for soy, RSPO for palm oil) provide partial but not complete coverage of the OECD Guidance requirements.

Grievance mechanisms. The OECD Guidance requires accessible, equitable, and rights-compatible grievance mechanisms through which affected communities and workers can raise concerns. For commodity trading companies sourcing from multiple developing-country origins, designing and maintaining such mechanisms requires both technical infrastructure and on-the-ground relationships.

Annual reporting. The Gegenvorschlag requires public annual reports covering conflict minerals due diligence, child labour due diligence, and general non-financial matters. Reports must be substantive — not mere boilerplate commitments — and should document specific risks identified, actions taken, and outcomes achieved.

Third-party cost benchmarks. Industry estimates suggest that a large commodity trading house implementing comprehensive OECD-aligned conflict minerals due diligence may spend CHF 2-5 million annually on compliance personnel, third-party audits, certification programme fees, and related costs. For CSDDD compliance covering a full value chain, the costs are estimated to be materially higher — potentially several times that figure for companies with complex global supply chains.

Frequently Asked Questions

Who must comply with Switzerland’s Gegenvorschlag due diligence requirements?

Swiss-incorporated companies (AG or GmbH) that exceed two of three thresholds — CHF 40 million net revenue, CHF 20 million balance sheet, 250 employees — must publish annual non-financial reports. Companies sourcing conflict minerals (tin, tantalum, tungsten, gold) from conflict-affected areas must additionally implement OECD-aligned due diligence. All large Swiss commodity trading houses fall within scope.

What are conflict minerals under Swiss law?

Switzerland’s conflict minerals provisions cover tin, tantalum, tungsten, and gold sourced from conflict-affected and high-risk areas (CAHRAs). The primary CAHRA of relevance to Swiss commodity traders is the DRC and adjoining countries, though the OECD Guidance covers any region where armed conflict, high levels of violence, human rights abuses, or weak governance create elevated supply chain risk.

How does the Swiss Gegenvorschlag compare with the EU CSDDD?

The Gegenvorschlag is a reporting and process-based framework focused on non-financial disclosure, conflict minerals, and child labour. The CSDDD goes further — imposing due diligence obligations across the full value chain, including downstream distribution; requiring Paris Agreement-aligned transition plans; and establishing civil liability for failure to prevent supply chain human rights violations. Swiss traders with EU business will need to comply with both.

Does Switzerland’s due diligence law create legal liability for supply chain violations?

The Gegenvorschlag does not create the direct parent company liability proposed by the original Responsible Business Initiative. Non-compliance with reporting requirements can result in regulatory action, but there is no private right of action for supply chain victims under the Gegenvorschlag. The EU CSDDD, by contrast, does establish civil liability, creating exposure for Swiss traders within EU jurisdiction.

What practical steps must commodity traders take to comply with OECD conflict minerals guidance?

The five steps are: establish management systems and a supply chain policy; identify and assess risks through supply chain mapping; design a risk response strategy; conduct independent third-party audits of smelters and refiners; and publish annual reports on due diligence findings. For gold specifically, using RMAP-compliant Swiss refineries (Valcambi, Argor-Heraeus, PAMP) provides a significant compliance pathway.

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