Commodity Futures Trading Commission (CFTC) officials are espousing the benefits of the newly established Climate Risk Unit (CRU), focusing on the role of derivatives in understanding, pricing, and addressing climate-related risk.
Acting CFTC Chairman Rostin Behnam said the CRU would also address efforts to transition to a low-carbon economy. The panel would be made up of staff from across the CFTC’s operating divisions and offices while representing the agency’s next step in response to a global call to action on climate change.
“The COVID-19 pandemic, as well as increasingly severe weather and environmental impacts, have firmly established the role of financial regulators in providing decisive leadership in times of market stress,” Behnam said. “Climate change poses a major threat to U.S. financial stability, and I believe we must move urgently and assertively in utilizing our wide-ranging and flexible authorities to address emerging risks. The CFTC’s unique mission focused on risk mitigation, and price discovery puts us on the front lines of this effort.”
Benham said leveraging the CFTC’s personnel, and expertise demonstrates a commitment to taking the next steps toward building a climate-resilient financial system.
The derivatives markets the CFTC regulates would play an essential role in supporting and developing new products and solutions addressing climate and sustainability challenges.
CRU provisions would enable increased participation in domestic and international fora aimed at building consensus for consistent standards, taxonomies, disclosures, and practices across derivatives products and markets and related clarity on regulatory, capital, and accounting standards.