Letters to Regulators: CFTC Must Address Climate Risk, Carbon Offsets

Americans for Financial Reform Education Fund (AFREF) submitted two comments to the Commodity Futures Trading Commission (CFTC) in response to their request for information on climate-related financial risk as pertinent to the derivatives markets and underlying commodities markets.

A coalition letter submitted jointly by AFREF, Amazon Watch, and 67 undersigned organizations focuses on the voluntary carbon offset markets and their derivatives, calling on the CFTC to investigate the integrity of the underlying spot markets and set qualifying standards for offsets that effectively reduce carbon emissions in ways that protect the rights of Indigenous and local communities.

AFREF’s comment with Public Citizen makes further recommendations that CFTC: 1) require enhanced climate disclosure from market participants, 2) incorporate climate risk in supervisory stress tests and scenario analysis of clearinghouses and other jurisdictional entities, 3) incorporate climate risk into margin requirements, and 4) investigate the integrity and systemic risk implications of new climate-related derivative products, among other recommendations.