Managing Climate Risk in the U.S. Financial System
Report of the Subcommittee on Climate-Related Market Risk
✒ CFTC’s report recommended common definitions and standards for climate-related data, such as modelling and calculation methodologies of carbon pricing. It also called for further financial innovation in environment-related derivatives (such as water futures) offered by exchanges and clearing houses.
Whether these derivative products in themselves are ESG-friendly or not, they do help support the need of those whose income depend on the environment (such as farmers) to hedge against unexpected price fluctuation of natural resources.