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FIA submits recommendation to the Taskforce on Scaling Voluntary Carbon Markets consultation

21 June 2021

On June 21, FIA submitted comments and recommendations to the Taskforce on Scaling Voluntary Carbon Markets Phase II Public Consultation Report. FIA’s comments focused primarily on governance body proposals and recommendations related to the legality, certainty, and regulatory oversight of carbon contracts. Today’s comments are part of FIA’s ongoing efforts to ensure that markets play an essential role in combating climate change and the associated risks to the global economy.

FIA’s response today notes that the risks posed by global climate change are real and urgent. They include direct financial risks from extreme weather, as well as the transition risks associated with fundamental changes in how the world does business.

The futures, options and centrally cleared derivatives markets will continue to play a critical role in helping the global economy navigate these risks. As the leading global trade organization for these markets, FIA and its members are committed to working with the public and private sectors to help foster robust and transparent voluntary carbon markets. These markets will be essential to meeting the goals of the Paris Climate Agreement.

FIA’s response to the Taskforce Phase II Consultation Report focused on recommendations related to a market governance body and legal principles for the market. Highlights include:

FIA recommendations related to umbrella governance body proposals – FIA commented that the listed derivatives markets have a strong track record of success in scaling high-integrity markets for a variety of asset classes. FIA urges any governance body developed by the Taskforce to rely on and work with existing governance and self-regulatory bodies that have proven to be both agile and responsible platforms for innovation.

FIA recommendations related to legal principles and contracts proposals – FIA commented that regulatory certainty is necessary for robust participation in markets, and carbon markets are no exception. FIA supports recommendations included in the Taskforce’s Phase II Consultation Report that encourage global regulators to review their treatment of voluntary carbon credits with the aim to better align these programs across jurisdictions. Additionally, FIA supports efforts of the Taskforce to promote standardized contracts, which will improve primary and secondary market liquidity and should be traded in parallel with contracts that allow for physical delivery.

About the Taskforce on Scaling Voluntary Carbon Markets

The Taskforce on Scaling Voluntary Carbon Markets is a private sector-led initiative working to scale an effective, efficient and functioning voluntary carbon market to help meet the goals of the Paris Climate Agreement. The Taskforce was initiated by Mark Carney, UN Special Envoy for Climate Action and Finance Advisor to UK Prime Minister Boris Johnson for COP26, is chaired by Bill Winters, Group Chief Executive, Standard Chartered and sponsored by the Institute of International Finance (IIF) under the leadership of IIF President and CEO, Tim Adams. Annette Nazareth, a partner at Davis Polk and former Commissioner of the U.S. Securities and Exchange Commission, serves as Operating Lead for the Taskforce, and McKinsey & Company provides knowledge and advisory support. The Taskforce’s participants represent the financial sector, market infrastructure providers and buyers and suppliers of carbon offsets. On May 21, the Taskforce published a public, providing an opportunity for stakeholders across the carbon markets value-chain to submit input on the Taskforce’s recommended blueprint to build a fully functional voluntary carbon market.

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