Every year, usually in Spring, Switzerland’s largest commodity traders run the gauntlet of scrutiny. They produce their sustainability reports, ever thicker, on glossy paper, while ensuring not to give too much away. After all, their core fossil business involves the purchase, transport and sale of coal, oil and gas. In addition to the success stories about their educational programmes, job security or environmental measures, they have been increasingly talking about climate-related projects for several years. Ever since the Paris Climate Agreement, which envisaged the reduction of climate-damaging net greenhouse gas emissions to zero by 2050, this socio-political issue has been a potential PR nightmare for the companies’ communications gurus. 

Public Eye has taken a closer look at these reports’ climate claims in an attempt to understand how the five largest Swiss commodity companies intend to make their business model climate-friendly. The exercise was very enlightening. By using euphemisms and fine-sounding empty phrases, the corporations Glencore, Gunvor, Mercuria, Trafigura and Vitol conceal the fact that their fossil fuels contribute significantly to one of the most urgent environmental problems. That’s why we worked out the maths ourselves, coming up with an alarming result. In 2023, the climate damage caused by their commodities exceeded that caused by Switzerland as a whole by about a hundredfold. Their self-imposed climate targets and the proposed alternative, carbon offsetting, hardly stand up to the challenges ahead, both in terms of their content and the calculations made. 

The final fossil fuel fling?

In recent years, as a result of the coronavirus pandemic, war and crises, commodity traders have posted historic record profits that had to be distributed. First of all, the companies paid out billions in dividends and bonuses, settled old debts and paid hundreds of millions of dollars in corruption fines. But their accounts are still bulging with money, which theoretically would also provide enough funds for the necessary transformation from a fossil to a climate-friendly business model. 

In practice, however, four of the companies revealed different priorities last August. For instance, the Geneva-based Trafigura Group acquired a new oil refinery at the start of the month. Then oil trader Vitol raised the stakes considerably by taking over a major coal trading company. Just a few days later, Glencore announced that coal remains its key business area; but more than that, its takeover of major mines in Canada signals that the Zug-based group is expanding further into the segment. Lastly, Gunvor reported a new oil-trading record and the expansion of its oil trading team. And all this happened within a summer month in which a global heat record was set for the fifteenth time in a row.  

Far too little of the excess profits racked up during years of crisis is being voluntarily channelled into genuine alternatives. The investment policy being pursued by the industry leader Vitol is indicative of this. Last year, the Geneva-based company invested more than four-fifths of its money into expanding its fossil fuel business, with more than $8 billion flowing into the oil industry alone. In the short term, Vitol does not intend to withdraw from its fossil fuel business, as the Swiss boss recently admitted to the French-speaking Swiss business daily “L’Agefi” Not without squarely shifting the responsibility for this to government agencies, he proclaimed: “We traders aren’t the ones who make energy policy; governments do.”

Hidden indirect emissions

Surely the influence of Swiss commodity traders on the climate really isn’t that small? Their sustainability reports should shed some light on how much carbon dioxide (CO₂) the companies are polluting the atmosphere with. But Public Eye found it extremely difficult, even sometimes impossible, to find reliable, complete information about the greenhouse gas emissions of Switzerland’s biggest climate polluters. The devil is in the supposed detail, the indirect emissions. 

Direct emissions occur during production steps controlled by the company, which might mean for commodity traders when they are operating a coal mine or oil refinery. Although the Swiss companies in question already have a growing influence at this stage in the value chain, this emission category is comparatively small for them. A much more important factor is their indirect emissions in the value chain, referred to as “Scope 3” in jargon. These emissions occur at various points, for example during the flight to the next deal or when transporting the traded commodities on chartered ships. However, by far the most significant greenhouse gases are produced downstream during use. The reason for this is that once traders have sold their oil or gas, it is always burned by someone somewhere to generate energy. These emissions are therefore not a by-product, but are an integral, material part of the commodity trading business model. 

But rather than calculate these indirect emissions in a comprehensible way and come clean when reporting them, most companies resort to linguistic gymnastics when it comes to addressing this sensitive topic. Mercuria, for example, simply sees no need to bother with these highly relevant figures at all. The “distinct role in the value chain, primarily as an intermediary” has prompted the Geneva-based trading company not to report on its indirect emissions from traded commodities. Vitol, on the other hand, reports only a fraction of its indirect emissions that occur when burning fuels from its own production facilities. Glencore takes a similar view, but comes up with significantly higher values due to its numerous coal mines. Trafigura dares to be a little more transparent, and includes the indirect emissions from the sales made by its own petrol station networks. But none of these companies declares the indirect emissions associated with the use of all traded commodities , by far the largest business segment. Only the figures reported by Gunvor appear more complete, thus more credible. 

“This practice not only conceals the true climate impact of the products they trade but also takes advantage of outdated voluntary disclosure rules,” says Frederic Hans of the German NewClimate Institute, clarifying the dubious and deficient calculation method used by the companies. Their calculations are based on a standard that is more than 10 years old, and has been outdated for a long time, which gives a lot of leeway in how indirect emissions along the value chain are recorded and calculated. His not-for-profit organization has been investigating the climate reports of multinational corporations for over eight years and the climate expert concludes: “By excluding these use-phase emissions, commodity traders obscure the largest part of their climate footprint, as the combustion of fossil fuels is the primary driver of global climate change. A shift toward more transparent and scientifically accurate reporting is urgently needed so that society, governments, and investors can better understand the environmental impact of commodity traders' business models.”

The true extent of climate damage

Given the lack of precision from the commodity trading companies when it comes to calculating their indirect emissions, we have reached for the calculator ourselves. Our estimates, based on the volumes of commodities traded, are conservative, but still paint a gloomy picture. The indirect emissions produced by Switzerland’s five largest commodity traders amounted to more than 4 billion tonnes of carbon dioxide last year – solely from the coal, oil and gas sold. This equates to almost a hundred times all the greenhouse gases emitted in Switzerland. 

Our calculations for Vitol are more than 40 times higher than the climate footprint reported by the oil trading giant itself. In 2023, the industry leader traded almost one million tonnes of crude oil a day and roughly half this volume again in gas. In total, indirect emissions produced by the fossil fuels it traded last year amounted to more than 1.3 billion tonnes of CO₂. The greenhouse gases discharged by the combustion of the oil and gas sold by Vitol exceeded even those of Brazil, the country with the world’s sixth highest level of emissions.

The figures reported by Trafigura are also around three times lower than our estimates, while those of Glencore are half as low. Mercuria, on the other hand, which chooses not to report any indirect emissions from commodity trading due to its “distinct role”, reports just 4 million tonnes of CO₂ emissions for the entire year. In other words, an incredible 120 times lower than our estimate. Confronted, Mercuria maintains that it follows a reporting standard under which Scope 3 emissions reporting is considered voluntary. Only Gunvor’s climate report, which has been fundamentally revised for 2023, comes reasonably close to Public Eye’s conservative estimates. These estimates reveal for the first time the true contribution made by the Swiss commodities sector to the global climate crisis, with the extraordinary damage caused by this primarily affecting the lowest-income countries.

Stopgap projects and pseudo-solutions

However, emissions data is not the only aspect of commodity traders’ climate reports which is embellished and pie-in-the-sky. Upon closer inspection, you will also see yawning gaps in any specific proposals made to improve their carbon footprint. The approaches and half-baked solutions presented have progressed no further than the early stages and are, overall, miles away from those far-reaching reduction measures that would be long overdue and necessary in this (including from a climate-policy perspective) high-risk sector. 

Glencore, for instance, spent five years planning a project in Australia that intended to capture the CO₂ produced by a coal-fired power plant at the chimney instead of letting it escape into the atmosphere. The gas was then to be pumped into the local groundwater “similar to a soft drink” with “no impact”. But the authorities concluded that the project would have caused “irreversible or long-term change to groundwater quality” and banned it. However, even if the pilot project had been approved, the Zug-based company would have had to build more than 1,400 additional plants like this to capture the climate-harming emissions attributable to its current coal facilities in Australia. 

Gunvor, Trafigura and Vitol, on the other hand, are focusing on technical upgrades of their huge ocean-going fleets. All these companies maintain that they have a particularly significant influence on the transport sector. For example, Trafigura wants to use lower-emission engines by 2030, but only in six of its 400 ships. Meanwhile, Gunvor is betting on improving the cleaning of its ship hulls and propellers to achieve a more energy-efficient operation, as well as on improved route planning. According to their own disclosures, however, the measures adopted by both companies are currently insufficient in terms of achieving even the minimum reductions expected by the International Maritime Organization for the sector. 

Mercuria, on the other hand, relies on a measure that is far less complex than such technological fixes: carbon offsets. Instead of cutting its own emissions, this trader is systematically buying up the promises of climate measures adopted elsewhere. It maintains its operations are already CO₂-neutral, at least in terms of direct emissions. Simply “buying away” the growing problem caused by their climate damage is becoming an attractive option for an ever-increasing number of commodity traders. Trafigura, Gunvor and Glencore are now also planning to buy offsets, at least in the long term, should their stopgap projects not yield sufficient results.

No target – or wide of the mark

Useful climate reports record clearly defined milestones indicating when a company intends to reduce its greenhouse gases, by exactly how much and where. The aim is to make it sufficiently transparent for analysts and outsiders alike to verify whether and how the relevant business model complies with the current climate policy framework. Our analysis reveals that completely different ideas and standards still prevail among Swiss commodity traders. This means that they set their climate targets surprisingly low. Or they don’t set any at all, in which case they surely can’t be missed. Only one of the five companies surveyed has set a time-specific target for reducing all direct and indirect emissions. 

Mercuria might have set itself the target of “net zero” by 2050. But the pathway it will follow to get there remains totally unclear - as does the question of whether the trader wants to continue to pursue this claim by buying offsets. However, that indirect emissions from commodity trading are not counted, applies also here for Mercuria. Vitol is doing it the other way round: the largest Swiss company by turnover, is setting itself nothing more than a partial target by the end of 2024. And because it only affects a nigh negligible part of the business, it can even be achieved if total emissions increase. However, the company makes no forecasts or concessions for subsequent years. 

But even the only company that has set itself time-specific reduction targets for all emissions raises serious doubts when you read its sustainability report. Palpably, Glencore was condemned by its shareholders to set more concrete climate targets. The multinational admits that these targets are “not in line” with the reductions in the energy sector that would be required to achieve the 1.5-degree target set by the Paris Agreement. However, the Zug-based giant is trying to put this basic contradiction into perspective by going on to discredit the corresponding scenario presented by the International Energy Agency as “increasingly unrealistic”. But this is not the report’s sole weakness. 

“We were concerned that Glencore relies on a misrepresentative and inflated base year,” contextualises Naomi Hogan on the phone. She is company strategy lead at the Australian Centre for Corporate Responsibility and had already protested the lack of ambition in the group’s climate targets by submitting a resolution at its Annual General Meeting. According to Hogan, Glencore is measuring progress against a baseline that includes emissions from a Colombian mine, which it later relinquished. “Measuring from an inflated baseline means that a year of typical emissions now looks like a reduction, with targets therefore easier for the company to meet.” Hogan says, adding that “restating the baseline is required for a more accurate view”. Glencore maintains upon request that it considers the chosen baseline year representative of its production and emissions profile. The group’s unwillingness to change its calculation, to Hogan, is leaving investors with a misguided picture of progress. 

Gunvor also uses this strategy. During the coronavirus pandemic, the group shut down a refinery completely due to economic reasons, reducing the trader’s direct greenhouse gases by more than a third in one fell swoop. Gunvor is still benefiting from this because it calculates its 2025 climate target using the pre-pandemic 2019 baseline, meaning that it has been achieving its reduction target for years. Asked about this, Gunvor responded that while further refinery closures would significantly reduce its direct emissions, it would not consider this as progress for several reasons like potential job losses. It also answered with a counterquestion, illustrating its stance on climate ambition: “If Gunvor acquires a gas fired power plant, as we have done this year in Spain, and our corresponding Scope 1 emissions increase, will we be accused of failing?” 

Public Eye has systematically evaluated the climate reports published by the Big Five in terms of emissions data, climate targets, planned measures and other aspects (see box). When it comes to the transparency and suitability of the targets and measures presented, we assess them as poor or very poor for the most part (Table 1).

Until now, publishing sustainability reports has been all but perfunctory for commodity traders. This is now set to change. New legal requirement stipulate that from 2024 onwards, companies affected by the counter-proposal to the Responsible Business Initiative will also be required to provide comprehensive information on climate matters for the first time. Concerned are also indirect emissions from material business segments, for commodity trading especially those from the use of sold products. Whether the large gaps and question marks that have typically marked the previous reports published by the traders in this regard are compatible with criminal law or can be fined under these provisions, will soon have to be clarified.

Business case climate crisis

While commodity traders continue to gloss over the true environmental costs of their lucrative coal, oil and gas businesses, the damage caused by global warming is becoming increasingly noticeable and measurable. Every drought, every flood and every heatwave increases the national and international political pressure on commodity traders to put an end to their fossil-fuel business model. With a view to pre-empting corresponding regulations and also remaining profitable, they are on a quest to find new globally tradable goods, preferably with green credentials. Cobalt, lithium or hydrogen come to mind nowadays. But our ever-innovative traders have already found a completely different one. 

According to their inventor, carbon offsets are a very strange commodity “that you can’t see, smell or feel”. In the past, Swiss traders would probably have turned their nose at such feeble properties. But nowadays, they seem to appreciate the benefits offered by a largely paper-based commodity, which does not have to be stored and transported at great expense but can simply be kept in a folder. All while keeping up a green facade.

Revelations about a project undertaken by the Swiss company South Pole in Zimbabwe in 2023 revealed the promise on which all carbon offsets are ultimately based. It is possible to emit greenhouse gases in one place with a clear conscience, as long as forests are preserved, renewable energies are promoted, or new trees are planted elsewhere. These offsetting measures are intended to bind CO₂ that has already been emitted or to prevent or at least reduce new emissions. The results of these measures are awarded in credits representing a saved ton of CO₂ that can be purchased and retired by end users to offset their greenhouse gas emissions. All without having to effectively reduce them. The fact that the projects can be implemented more cheaply at locations other than where the emissions were produced is the key prerequisite for the climate offsetting business. 

Trading in carbon credits is similar to fossil commodities, not only because they usually come from parts of the world that do not consume them themselves. Offset prices are also extremely volatile, and can double or triple within a short period of time. Making a profit from these swings is the main business of every commodity trader. The carbon credit market is also shrouded in a great deal of secrecy. According to estimates, four out of five offset deals are transacted outside the stock exchange, thereby making them, in fact, completely secret. 

However, the main reason why Swiss commodity traders are now making major inroads into the offset market is their belief in its profitable future. A growing number of countries are attaching vital importance to the promise offered by offsets among the raft of political measures against the climate crisis. These conditions are set to push up prices; the next commodity boom is beckoning. True to the motto: the earlier and higher the investment, the greater the return. This is probably the logic driving commodity traders into the offset market, rather than concerns about the climate or the company’s image. 

Cookstoves for the climate

“You really don't know what kind of intermediate players are involved, how many players are involved, what sort of money are they taking. It remains a big challenge for us to understand the money trail in the credit trade,” tells Trishant Dev from the Centre for Science and Environment in New Delhi. He has produced a detailed report on offset projects in India. This country is one of the world’s largest producers of credited emissions reductions. However, during his research, he had problems finding out which dealers actually ended up with the carbon credits. “It’s like a black hole.” 

In one case, however, Dev was able to identify the purchaser. He points to a contract between an Indian company that develops climate projects and Vitol. The latter had bought credits for 11 million tonnes of CO₂ in April 2022. In return, the Indian company undertook to distribute 600,000 cookstoves on the subcontinent. The supposed carbon offsets after five years are equivalent to the emissions caused by 10 million transatlantic flights from Zurich to New York. While it’s not clear where exactly Vitol’s offsets come from, Dev has visited numerous cookstove projects run by the developer company in central India. “Many of the households involved are not aware that the cookstoves are used for carbon credits. We also saw the cookstoves not being utilised by the households at all,” he describes his observations. 

The climate-friendly assumption behind the cookstoves is simple. In numerous lower-income countries, cooking is done using a simple brazier or on an open fire. As a result, the charcoal burned for this purpose emits heat in all directions, which, on the one hand, loses energy and, on the other, produces toxic smoke and soot, thereby posing a major health risk, especially indoors. If a company distributes energy-efficient cookstoves, the upshot of this is not only less smoke, but also CO₂ savings. In the offset market, project development companies can calculate this reduction themselves by following established standards, and after hiring an independent consultant for an audit have certificate registers certifying corresponding carbon credits for resale.

“The assumptions made in these calculations and the piecemeal use of the cookstoves contribute to the fact that the achieved emissions reductions are significantly overestimated,” explains Benedict Probst. Together with researchers from ETH Zurich and 11 other universities, Probst, an environmental economist at the Max Planck Institute in Munich, investigated how many of the CO₂ certificates issued in the most common types of climate projects comply with scientific standards. Cookstove projects came off among the worst: only 11 percent of issued carbon credits actually represent reduced emissions. 

Despite these sobering findings, Vitol, who pre-financed and conducted studies for one of the critically evaluated projects, continues to promote such controversial projects on a large scale. And not only in India, but also in the Democratic Republic of Congo, Kenya and Tanzania. Vitol replied to our inquiry that before becoming involved it “undertakes significant due diligence and only supports projects of the highest quality”. The project in question should soon be subject to re-revaluation. The Geneva-based company has had more than 2.1 million cooking stoves distributed in sub-Saharan Africa in the last 20 years. In May 2024, CEO Russell Hardy announced that he would invest a further $550 million in Africa by 2030, a significant part of which would be in these very same cookstove projects.

Trees on the drawing board

Trafigura is barking up another wrong tree, so to speak. It only became involved with carbon trading in 2021 and, according to Bloomberg, has already risen to become the industry leader within just three years. Its key to success is “nature-based solutions”, including large-scale planting of new forests. If only there were a second Amazon to extract CO₂ out of the air, the climate crisis would be averted. This bold assumption underlies one of the offset projects that Trafigura showcases in its promotional videos. 

In eastern Colombia, near the Orinoco River, Trafigura is financing a project called the “Green Compass”. Millions of trees are to be planted in the savannah to allow a new forest to grow on an area covering 100 square kilometres. To ensure that this gets up and running as soon as possible, Trafigura is planting rapid-growing eucalyptus trees. What sounds like a bold, proactive choice could, however, quickly backfire because eucalyptus is considered to be a tree that is highly flammable and, in recent years, there has been a series of devastating forest fires in the region. Within a two-month dry spell past year, the project had to manage close to 200 fires. Trafigura says that it has “invested significantly in rigorous fire management measures” and that these fires had no impact on the planted area. But whether the trees will actually survive the expected 30 years, which is still too short for an effective climate project, is a completely open question.

But it’s precisely this question about the durability or permanence of emission reductions that is the crux of the matter for climate scientists like Probst. He does believe that offsets can play a certain role in the long view. But only if their buyers have previously reduced most of their own emissions, and if these projects can then store the CO₂ for a long period. This risk is often underestimated, especially in forest projects, for example because of fires: “It may well be that in 10 years’ time, many of the credits that may represent emission reductions today will not amount to any actual reductions at all.” 

No lessons learned from the South Pole scandal

But forest projects come even easier, and less expensive, than planting trees: promising to protect or at least cut them down less quickly. In these types of projects, developers model how much forest could be lost in the future due to clearing or fires in a region. If the actual level of deforestation is lower than assumed by the project developers, carbon credits are created. Around a quarter of all voluntary carbon credits worldwide, i.e. covering more than 460 million tonnes, come from such projects, which are referred to in technical terms as REDD+ (Reducing emissions from deforestation and forest degradation), according to a database run by the University of Berkeley in the United States. 

A great deal of this is little more than hot, but very lucrative, air because project managers often overestimate how much forest is going to be lost: for example, by drawing on historical experience in comparable areas that predict a dangerously high loss of forest in the project region. If this gloomy scenario does not happen, more carbon credits are created than would be justified. The discrepancy in their own calculation can pay off for project developers as they will receive more offsets for sale. In the scandal surrounding the South Pole project, the investigative outlet Follow the Money also reported on such discrepancies. 

A study conducted by the University of Amsterdam examined how systematically the offsetting effects were overestimated for 26 of the largest REDD+ projects. They took into account not only the assumed deforestation, but also the deforestation as actually observed. They concluded that in reality, the forest projects could only meet 7 percent of the offsetting effects attributed to them. 

Mercuria has announced that it intends to invest half a billion US dollars in “climate solutions” by 2030. Despite all the scientific criticism, the oil trader invests a significant proportion of this in such forest-protection projects. In Brazil, for example, the company has secured the exclusive purchase rights for the credits issued from protecting rainforest in the state of Tocantins. Should deforestation be curbed there, more than 200 million tonnes of the greenhouse gas will eventually be offset on an area the size of the UK. Mercuria maintains that its projects “are developed under established carbon offset programs that have strong governance, technical standards, third party audit processes and regular review processes.” The company also believes “nature-based solutions have the potential to make a significant contribution to global efforts to achieve net zero”. Not only because they are available today, but also because “the cost per tonne is significantly lower than some of the alternatives”. 

In many countries, forests are controlled by national or regional governments. For example, Mercuria’s marketing rights for carbon offsets from the Peruvian forest stocks in Ucayali and Madre de Dios also come from the respective regional governments. In a letter of intent, the commodity trader had already declared in 2021 that it wanted to undertake similar projects in or with Ghana. Since these projects, like many of the other climate projects involving the commodity traders, do not yet exist, the jury is obviously still out on what their effective impact will be. 

Mercuria not only relies on government agencies for its climate projects, but also moves in international climate diplomacy circles. Last year’s COP climate conference in Dubai was attended by three company representatives, including the head of the company. Glencore and Trafigura were also on the attendees list. Trafigura took the opportunity to meet with a government delegation from Paraguay, while Vitol agreed last year with the Nigerian sovereign wealth fund on running a joint project to distribute its cookstoves. As elsewhere in commodity trading, the same seems to apply to carbon. The hardest currency is still maintaining good contacts with political leaders. 

Inadequate response

The fossil-fuel business model of Switzerland’s five largest commodity traders is based on the trade in coal, oil and gas and the climate damage associated with it. This model, which includes its extraordinarily large indirect greenhouse gas emissions, currently has no political or economic future in the long term, with the sector facing a fundamental upheaval. Even the increasingly thick and glossy reports on environmental and social projects cannot hide the urgency of the situation. 

One response is supposedly provided by climate offsetting projects. But even if the planned projects were to actually keep their honourable promises, their impact would remain completely inadequate. The emissions reductions promised by Trafigura’s 30 years forest project in Colombia are negated by the volume of crude oil it trades every eight days. In a year, a cookstove project run by Vitol in the DRC at best prevents the greenhouse gases produced by the oil that the company sells in half an hour!  

In addition, these projects fail to compensate for the fundamental lop-sided nature of commodity trading. In this future too, regions with lower incomes are still to satisfy the demand of the richest regions of the world, commodity traders always the willing go-betweens. The fact that the companies are relying on such an approach, while continuing to invest billions in the expansion of fossil fuels, reveals the real message contained in their climate reports: see if we care.