FIA today released the 2021 Sustainable Finance Report to highlight the derivatives industry’s work on climate-related policy and other efforts to combat climate change.
“While governments have spearheaded the response to the challenge, I believe it is the private sector that has moved the needle over the last two years. We should be proud that our markets will be front and center in managing the risk around climate change and helping discover prices that will align incentives, drive capital investment, and change citizen behavior,” said FIA President and CEO Walt Lukken in opening remarks at FIA’s International Derivatives Expo conference.
Today’s report updates and supplements the September 2020 policy paper “How derivatives markets are helping the world fight climate change”. The report focuses on the use of environment futures, and it features industry resources and case studies to highlight the contributions that the derivatives industry is making.
The report highlights examples of futures and options aligned with the global transition to a more sustainable economy and the growing use of environmental futures. In addition, the report notes new contracts rolled out by several derivatives exchanges to support trends toward sustainability in various sectors of the economy. These include emission allowance contracts that play a key role in reducing carbon in the atmosphere and futures and options on carbon offsets, clean fuels, bioenergy, and recycled materials.
The report also highlights notable FIA work over the past year. FIA joined the Taskforce on Scaling Voluntary Carbon Markets, an initiative working to scale an effective, efficient, and functioning voluntary carbon market to help meet the goals of the Paris Climate Agreement. The Taskforce, led by former Bank of England Governor Mark Carney, aims to gather stakeholders across the carbon markets value-chain to put forth a fully functional voluntary carbon market that can scale up to reduce emissions and fight climate effectively. FIA also was active with the Global Sustainable Finance Council and the US Climate Finance Working Group, a body of 11 financial services trade associations. The group published its Principles for a US Transition to a Sustainable Low-Carbon Economy and has continued to meet on critical issues in anticipation of increased focus on climate issues by the Biden Administration.
FIA understands that much work remains ahead in reducing worldwide emissions and transitioning to a more sustainable economy to alleviate the threat of climate change. FIA member firms and the global cleared derivatives industry will continue to support lasting solutions to climate change.