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As we witness the escalating impacts of climate change through severe weather and disasters, the necessity for immediate and effective action has never been more apparent. It’s our view that banks, financial institutions, and in some cases regulators, have not been doing enough to manage and account for the risks of climate change or to support the transition towards a more sustainable economy. At Better Markets, we are advocating for regulatory agencies to do their part.
This month, our team continued our work to tackle this existential threat. For example, voluntary carbon markets (VCMs) are essential for reducing greenhouse gas emissions but are hindered by challenges like fraud, disorganization, integrity concerns, collective action problems, and lack of public sector leadership. A key financial regulatory agency, the Commodities Futures Trading Commission (CFTC), has jurisdiction over VCMs and we have been advocating for it to take a leadership role here for some time.
It finally proposed some guidance on December 27, 2023 and we submitted a comment letter on February 16th supporting the proposal, and also recommending that the CFTC adopt further measures to improve the voluntary carbon market. This includes the implementation of mandatory transaction reporting, the establishment of conduct standards for intermediaries, and the promotion of market integrity through the standardization of documentation and certification for environmental commodities. The proposed changes are designed to intensify efforts against market manipulation, thereby enhancing the markets’ credibility and effectiveness in the fight against climate change. These reforms align with Better Markets’ long-standing advocacy, including our 2021 letter to then Acting CFTC Chair Behnam.
We have also called on the SEC to finalize rules on climate disclosure, ESG, and market structure reforms. By finalizing these rules as we suggest, the SEC can help ensure that investors receive key information about the climate risks facing the companies they own, that investment funds can’t mislead investors with unwarranted hype about their ESG offerings, and that everyday Americans really do get the best prices when brokers execute their securities trades. While we recognize that the SEC must take the time warranted to ensure that the rules fully comply with the law and are effective, now is the time to act.
There’s a lot going on across all the financial regulatory agencies, but it’s part of our job to make sure that the agencies like the CFTC focus on the key issues and have a sense of urgency when it comes to the critical issues of our time, including of course climate change. With your help, we’ll continue to push the agencies to act in the public interest.
Cantrell
Cantrell Dumas
Director of Derivatives Policy, Better Markets
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