What: On Friday, October 7th, a coalition of climate justice, Indigenous, and financial regulation advocacy organizations will submit a letter demanding that the U.S. Commodity Futures Trading Commission (CFTC) investigates and regulates carbon offset derivative trading to rein in misleading claims, fraud, and undisclosed risk and prevent the growth of systemic financial risk caused by climate and environmental injustices. Organizations leading the effort include Amazon Watch, Americans for Financial Reform Education Fund, and more.
Finally, AIDESEP, the federation of Indigenous organizations of the Peruvian Amazon, will submit a comment letter focused on respect for Indigenous rights in carbon market programs.
When: Letters will be submitted electronically on Friday, October 7th, 2022, at 8 a.m. Eastern Time
Who: Experts are available to comment.
Interviews with organizations:
- Roshan Krishnan, Climate Finance Campaigner, Amazon Watch: forest offsets, Indigenous rights, the Amazon, climate and environmental justice, roshan@amazonwatch.org or +1.765.586.1533
- William Pierre-Louis, Jr., Communications Associate, Americans for Financial Reform Education Fund: financial regulation, CFTC authority, offset and derivatives trading, william@ourfinancialsecurity.org or +1.347.499.7874
Background:
The CFTC, a U.S. financial regulatory agency that regulates derivatives markets, has issued a request for information (RFI) regarding factors the agency should consider when responding to the financial risk caused by climate change. Of particular concern is the issue of voluntary carbon markets and their derivatives, which have seen significant growth in recent years yet are subject to little regulation.
Allowing voluntary carbon markets to go without regulation has resulted in egregious violations of environmental justice and Indigenous land rights while delivering little benefit for the climate. Voluntary offset projects have resulted in land grabs and displacement in the U.S. and abroad, while enabling the fossil fuel industry’s continued pollution of working-class communities and communities of color. Especially pertinent for the CFTC, the underlying offset credits that drive these violations are often themselves fraudulent, claiming false climate benefits that sometimes even increase carbon emissions. CFTC has the authority to investigate and ensure the integrity of the carbon offset spot markets that underlie currently listed derivative contracts.
The CFTC has an opportunity to enact regulations that will help promote the integrity of the derivatives market while helping market participants mitigate risks associated with environmental and climate justice violations. The institution should also create a registry for offset credits with strong standards on climate integrity, environmental justice, and Indigenous rights. Indigenous peoples – including several still living in voluntary isolation – and rural communities are under threat in the Amazon from large-scale industrial development, especially policies and activities related to extractive industries like oil and mining.
