“It has become very difficult to finance or secure trade with Russia”


Nicholas Righetti

The commodities trading sector, which is very well established in Switzerland, was badly affected by the war in Ukraine. Many companies are trying to end their dependence on Russia, said Florence Schurch, secretary-general of the Swiss Trade and Shipping Association (STSA).

This content was published on May 24, 2022 – 09:08

Little known to the general public, commodity trading is a key activity in the Swiss economy, particularly for the Lake Geneva Region, the Canton of Zug and the Lugano Region. According to STSA, this center of activity represents 35,000 jobs and 4% of gross domestic product.

Despite its traditional secrecy, this sector regularly finds itself in the spotlight, being targeted – directly or indirectly – by popular initiatives at the federal level. The war in Ukraine is currently making headlines. According to Le Temps, three quarters of the trade in Russian and Ukrainian hydrocarbons and grain is handled from Switzerlandexternal link. Meeting in Geneva with Florence Schurch, Secretary General of STSA.

Florence Schurch in a nutshell

Florence Schurch was born and raised in Geneva. She earned a master’s degree in political science from the University of Geneva and a master’s degree in international security from Georgetown University in Washington. After various positions with the Federal Police, the Swiss Embassy in Washington and the Swiss Consulate General in Frankfurt, she was a lobbyist for the canton of Geneva for eleven years; as such, she was responsible for representing the interests of this canton in important federal affairs. Florence Schurch was appointed Secretary General of STSA in February 2020.

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swissinfo.ch: What challenges do your members face with the war in Ukraine?

Florence Schurch: Initially, our members present in Ukraine worked to ensure the safety of their local teams and assets. Some boats still got stuck in Mariupol, but fortunately all the personnel survived.

Then some of our members face great difficulties because of the sanctions against Russia. It has become very difficult to finance or secure trade with Russia, especially to honor existing treaties. As a result, many companies are changing their business model and no longer want to be dependent on this country.

Do Swiss-based banks still finance transactions with Russia?

Each bank is free to pursue its own strategy, provided of course that it does not violate the applicable sanctions. Nevertheless, in the vast majority of cases, Swiss-based banks go far beyond what the sanctions require. There are even cases in which trading companies – purely Swiss and in compliance with the sanctions – have closed their bank accounts. Of course, this has consequences for employment in Switzerland.

“The vast majority of Swiss-based banks go well beyond what the sanctions on Russia require”

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What are Switzerland’s strengths for your industry?

Among Switzerland’s many assets, I would like to highlight the density of banks specializing in trade finance. But even more important is the abundance of highly qualified workforce, thanks in particular to our specialized training. I am thinking, for example, of the Master in Commodity Tradingexternal link from the University of Geneva or trade finance courses from the Higher Institute for Banking Educationexternal link. Without these advantages, many companies in our industry would have already gone abroad to reduce their operating costs and benefit from more favorable taxation.

What are the most important companies in your industry that have recently come to or left Switzerland?? And who are your main competitors? Amsterdam, London, Singapore?

The situation in Switzerland is stable. We haven’t seen any big moves lately. In addition, it is natural that several cities are trying to attract trading companies that are currently based in Switzerland; However, it is not my job to single out our competitors.

A number of Swiss retailers outsource non-essential functions to low-wage countries. How big is this phenomenon?

This phenomenon of outsourcing to low-wage countries is very general and by no means specific to Switzerland and our area. However, lately I have observed a slowdown in this trend in our industry, no doubt as a result of the pandemic and the war in Ukraine.

Your industry is regularly attacked by grassroots initiatives. The most recent, the Responsible Business Initiative, was only just beaten in November 2020. What are the effects of these attacks?

These recurring attacks primarily target the economy as a whole. I am thinking, of course, about the vote on responsible multinationals, but also about food or corporate taxation. Even if unsuccessful, these attacks destabilize the economy, and that’s not good for Switzerland at all. Let’s never forget that it is companies that create jobs and fund training and social programs.

Your industry is quite oligopolistic. For example, four global giants dominate the agricultural trade: ADM, Bunge, Cargill and Louis Dreyfus.

I don’t think our industry is inherently oligopolistic, although the media does highlight a few big companies. Nevertheless, the countless small players as a whole have more weight than a large company. This situation also prevails within our association.

In 2019, the President of the STSA wanted the Swiss people to be just as proud of their traders (commodity traders) as of their cheesemakers. What progress so far?

They are huge. In the past, traders did not see the need to communicate with the public for several reasons, including the multiple audits their employers have to undergo and the presence of their infrastructures (mines, silos, ships, etc.) abroad. And retail companies are much less well known to the general public than companies like Nespresso, Starbucks, BP or Shell.

Fortunately, the board of our association decided in favor of an active communication strategy last year. Our goal is to avoid suspicions due to lack of communication. Besides, we don’t want to leave the field open to our critics. This much more intensive communication is ensured to a large extent by the STSA.

Regarding environmental, social and governance (ESG) criteria, would you say that the Swiss attitude is avant-garde or rather wait-and-see?

In this respect, Swiss trading companies are absolutely avant-garde, even if this is not sufficiently recognised. Let’s take the example of the Rainforest Alliance, an initiative that aims in particular to protect forests and biodiversity. Trading companies that are heavily involved in coffee are involved in this organization, but it is mainly other, much better-known companies that communicate about the results of the Rainforest Alliance.

Your association regularly organizes cocktail parties for federal parliamentarians in Bern. Does Swiss politics know your industry well?

Absolutely! We meet regularly with federal parliamentarians and even federal councillors. The fact remains that considerable efforts have to be made in German-speaking Switzerland, both in terms of communication and contacts with politicians.

“For the trade sector, Switzerland’s most important asset is the abundance of highly qualified workers”

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The STSA has 180 members from over 500 companies that are active in their sector in Switzerland. In addition, some key players such as Trafigura, MSC or Glencore are not – or no longer – members of your association. Don’t you have a legitimacy problem?

An association like the STSA is like a political party. There are members who leave and others who come. Overall we’re pretty stable and I’m not too worried about that.

Like the banking world, the retail sector is an extremely male environment. For whatever reasons?

Unfortunately you are right. To mitigate this problem, I do my best to single out female leaders and try to emulate them. Fortunately, 25% of the students of the Master in Commodities Trading at the University of Geneva are women. That percentage is still very low, but we’ve come a long way.

Sometimes women are their own enemies too: while retail companies are willing to hire them, the number of applicants remains very small. In general, Switzerland is lagging behind when it comes to promoting women in the world of work. I am thinking, for example, of the high cost of childcare and the lack of crèches.

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