The U.S. Commodity Futures Trading Commission (CFTC) has released a Request for Information seeking public comment on climate-related financial risk (the RFI). The CFTC notes that the RFI will inform its understanding and oversight of climate-related financial risk relevant to the derivatives markets, underlying commodities markets, registered entities, registrants, and other related market participants. This bulletin briefly summarizes the RFI.
The RFI is seeking comments on questions posed by the CFTC around the following topic areas:
- scenario analysis and stress testing;
- risk management;
- product innovation;
- voluntary carbon markets;
- digital assets;
- financially vulnerable communities;
- public-private partnership/engagement; and
- capacity and coordination.
The CFTC indicated that it may use the responses and comments received through the RFI to inform potential future actions including the issuance of new or amended guidance, interpretations, policy statements, or regulations, or other potential action by the CFTC.
All of the CFTC’s commissioners voted in favour of the RFI. However, Commissioner Mersinger, in a concurring statement included in the RFI, indicated that several of the questions in the RFI were beyond the jurisdiction of the CFTC. Commissioner Mersinger asserted that the CFTC does not regulate commodity markets and does not have statutory authority to create a registration framework for participants within voluntary carbon markets nor the authority to regulate digital assets or distributed ledger technology outside of activities related to derivatives. In addition, Commissioner Pham stated that the CFTC should seek to harmonize any climate risk management framework with existing prudential and other regulatory regimes for registrants already subject to such regimes.
The RFI follows the CFTC’s first Voluntary Carbon Convening (the Convening) which discussed issues related to the supply and demand for high quality carbon offsets, including product standardization and the data necessary to support the integrity of carbon offsets’ greenhouse gas emission avoidance and claims. The Convening included participants from carbon offset standard setting bodies, a carbon registry, private sector integrity initiatives, spot platforms, designated contract markets, intermediaries, end-users, and public interest groups with many emphasizing the importance of ensuring high integrity carbon offsets in the market.
Interested stakeholders are encouraged to submit comments and responses to the RFI by 8 August 2022.