The growing carbon credit and related derivatives markets continue to attract the attention of regulatory agencies and law enforcement. The U.S. Commodity Futures Trading Commission (CFTC) has just announced that it is looking for whistleblowers on potential fraud or manipulation in the carbon credit markets, which is a major enforcement development in the ESG space. Jones Day partners Josh Sterling and Howard Sidman talk about the CFTC’s ramped-up enforcement focus and what it means for participants in the carbon markets.
Efforts by government agencies, companies, and investors to limit the effects of climate change continue to influence activity in the financial markets. Interest in carbon markets, where emission credits are purchased and sold─and also where derivatives on those credits are traded─is growing rapidly, and that trend is expected to continue. Some estimates predict the cost of carbon could eventually double, due to the increased focus on climate issues and the tightening of greenhouse gas standards by global regulators.
The increase in trading volume has attracted the attention of regulators and enforcement agencies. Jones Day partner Josh Sterling explains how the carbon markets work, details the risks participants face, and describes what companies using these markets should do now.