The CFTC Acting Chair Rostin Behnam announced the establishment of the Climate Risk Unit (CRU) to support the CFTC mission by focusing on the role of derivatives in understanding, pricing, and addressing climate-related risk and transitioning to a low-carbon economy. The Unit is intended to accelerate early CFTC engagement in support of industry-led and market-driven processes in the climate—and the larger environmental, social, and governance (ESG)—space critical to ensuring that new products and markets fairly facilitate hedging, price discovery, market transparency, and capital allocation.
The formation of this Unit follows years of climate leadership at the CFTC by Behnam, who spearheaded the effort to establish the Market Risk Advisory Committee’s Climate-Related Market Risk Subcommittee and requested the September 2020 report on managing climate risk in the U.S. financial system. As the U.S. joins governing bodies worldwide in recognizing the need to reduce carbon emissions, the derivatives markets regulated by CFTC will play a vital role in supporting and developing new products and solutions that address climate and sustainability challenges. In support of these efforts, it is widely recognized that globally consistent standards, taxonomies, and practices will be critical as the industry and policymakers partner and guide their economies through the transition.
By leveraging in-house expertise in the backdrop of a history of developing and enforcing standards and policies alongside exchanges and self-regulatory organizations, the Climate Risk Unit of CFTC will ensure that the agency remains a helpful participant in all relevant discussions. In addition to undertaking research and engaging in ongoing market and stakeholder outreach, in support of the CFTC mission, the Unit may facilitate the following:
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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