On March 17, Acting Chairman Rostin Benham of the Commodity Futures Trading Commission announced that he has created a new Climate Risk Unit (CRU) to focus on the role of derivatives in mitigating climate-related risks and helping the economy transition to lower carbon usage. The CRU includes staff from across the CFTC’s various divisions and officers and represents the next step in years of climate leadership for the CFTC (including last year’s publication of the Market Risk Advisory Committee’s Climate-Related Market Risk Subcommittee’s report on Managing Climate Risk in the US Financial System).
The CRU will undertake ongoing market and stakeholder outreach to help support developments in the derivatives markets that facilitate understanding, pricing, and addressing climate-related risks. The CFTC also aims to utilize the CRU to increase participation in domestic and international fora focused on standards and practices across derivatives markets with respect to climate-related products and data. In addition, the CRU will help evaluate whether regulatory sandboxes or labs might serve to enhance further positive developments in this space.