June 3, 2022

CFTC Requests Information on Climate-related Financial Risk

The CFTC issued a Request for Information ("RFI") on risks to the derivatives and commodities markets presented by climate change.

The CFTC's RFI seeks information on both physical risks to the underlying commodities markets caused by climate-related events and "transition risks" related to evolving policy. Transition risks concern market-based responses to climate risk, particularly efforts to reach a "net-zero, low-carbon economy." In response to President Biden's Executive Order 14030 ("Climate-Related Financial Risk"), the Financial Stability Oversight Council had recommended that its member agencies, including the CFTC, take various steps to mitigate the financial risk presented by climate change.

The CFTC is seeking information on all aspects of its role and ability to effectively evaluate and manage climate-related risk, including:

  • identifying appropriate data sets to better inform its approach to climate risk;
  • bolstering public reporting on climate-related information;
  • re-evaluating existing stress-testing and analytical frameworks used to assess risk exposure;
  • improving market participant risk management capabilities (and for the CFTC to facilitate risk management through regulations and guidance);
  • promoting climate-related product innovation and considering the role of digital assets; and
  • enhancing the integrity of voluntary carbon markets.

Comments on the RFI must be received within 60 days of publication in the Federal Register.

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