Public Statements & Remarks

Opening Statement of Commissioner Kristin N. Johnson – Outlining A Plan for CFTC Engagement in Carbon Markets

July 19, 2023


Good morning.  It’s a pleasure to be here for the CFTC’s Second Voluntary Carbon Markets Convening.  Last year, the CFTC hosted a similar convening and issued a Request for Information (RFI) soliciting comments and feedback from many who gathered with us last year and today.

Recognizing the Risks

As noted in a recent Bank of England report on climate-related financial risks, “[c]limate change affects our world, our economy and our financial system.”[1]  In connection with last year’s convening and the RFI, I noted that: 

According to data gathered by the National Oceanic and Atmospheric Administration’s (NOAA’s) National Centers for Environmental Information, since 1980, the United States has sustained more than three hundred weather and climate disasters, including droughts, floods, severe storms, cyclones, wildfires, and winter storm events that, in the aggregate, led to costs or damage exceeding more than $1 billion. Notwithstanding our long history of navigating severe-weather related events, the increasing frequency, severity, and intensity as well as the rising costs of these events raise important questions and remarkable concerns.[2]

I called attention to the White House and fellow regulators’ acknowledgement of these concerns, noting that President Biden in May of 2021 issued an Executive Order on Climate-Related Financial Risk [3]  directing the Secretary of the Treasury to engage with Financial Stability Oversight Council (FSOC) members to consider issuing a report on member agencies’ efforts to consider climate-related financial risk.  In response to the Executive Order, the FSOC issued the Report on Climate-Related Financial Risk (Report). [4]

  • Build capacity and expand efforts to address climate-related financial risks;
  • Fill climate-related data and methodological gaps;
  • Enhance public climate-related disclosures; and
  • Assess and mitigate climate-related risks that could threaten the stability of the financial system.

Climate Risks Hitting Home – Texas, Our Texas!

I also noted that we are all increasingly touched by the events that threaten environmental sustainability and the integrity of our markets.  I grew up in North Texas—an area that remains home for my family and the community that contributed to every success (personal and professional) that I have enjoyed.

In February of 2021, Winter Storm Uri devastated North Texas and many parts of the state.  Winter Storm Uri was the catastrophic weather event of February 2021. The storm contributed to 210 deaths, and the Federal Reserve Bank of Dallas estimated the state’s financial losses because of the storm would range from $80 billion to $130 billion.  During the storm, more than two out of three Texans—approximately 69%—lost electricity at some point during the storm, for an average of 42 hours.[5]  The significant financial loss can be attributed to the loss of powerphysical infrastructure damage, and forgone economic opportunities.[6]  According to the Texas Section of the American Society of Civil Engineers, some engineers estimate that the cost of the storm could reach $300 billion.[7]  This financial loss is substantially greater than both Hurricanes Harvey ($145 billion) and Katrina ($161 billion).[8]

Developing A Game Plan

The development of sustainability initiatives requires our careful consideration and merits robust debate.  While there may be well-supported yet divergent perspectives, our common goal must be to adopt a transparent path that effectively prevents double-counting, ensures additionality, and prevents fraud as well as greenwashing.  In financial markets, sustainability must be a high priority and top of mind for regulators and market participants.

The rapid growth of these markets requires the Commission’s careful consideration to ensure these markets retain their integrity and continue to successfully support the reduction of greenhouse gas emissions.  Our regulatory framework must keep pace with developing products  and emerging markets. In the last year, alone, two of the leading standard-setting bodies—the Integrity Council for the Voluntary Carbon Market (ICVCM) and the Voluntary Carbon Market Integrity Initiative (VCMI) are working to release rules for both suppliers and buyers of carbon offset credits.[9]  The requirements contained in each of these rulebooks aim to establish a high standard for carbon credits and promote market integrity and, as a result, consumer confidence, and would be exemplary resources to determine the Commission’s much-needed next steps.

In my capacity as the sponsor of the Market Risk Advisory Committee (MRAC), I re-established the Climate-Related Market Risk Subcommittee.  This subcommittee will provide reports and recommendations to the MRAC on climate-related risks in financial markets, which the MRAC, in turn, will consider and discuss.  The topics and issues that this Subcommittee may consider include examining the Commission’s role in the regulation, supervision, enforcement, and oversight of climate-related markets and products; ensuring the resilience of derivatives and related financial markets to climate-related risks; and promoting the integrity of derivatives and related financial markets facing climate-related risks.

One of the primary ways to trade credits is via futures contracts.  At the latest MRAC meeting, Peter Malyshev reported that there are over 200 environmental-based futures contracts that have been traded in carbon markets in the U.S.[10]  Experts are also seeing the development of an OTC market in swaps related to environmental products and other sustainability-related products[11]  The Commission has long possessed the authority to act as an enforcement body in this market, specifically, by enforcing anti-fraud and anti-manipulation.  I am confident the subcommittee and the MRAC will be able to contribute significantly as these discussions move forward.

I am hopeful that today’s discussion will lead to a clear description of tangible actionable next steps within our existing authority that the Commission may immediately begin to implement address the increasingly detrimental concerns arising as a result of Climate-Related Financial Risks.

I look forward to discussing the current state of VCMs and the ways in which we, as a Commission, and the private and public sectors can contribute to this emerging market’s integrity and development.


I want to thank Chair Behnam and his counsel, Abigail Knauff, for bringing us all together today.  I am grateful for the opportunity to participate and learn from the robust group of experts joining us today.  I look forward to the presentations over the course of the morning and this afternoon.

[1] Bank of England, The Bank of England’s climate-related financial disclosure 2023, July 6, 2023,

[2] Statement of Commissioner Kristin N. Johnson In Support of the CFTC’s Request for Information on Climate-Related Financial Risk, June 2, 2022,

[3] Executive Order 14030 of May 20, 2021, Climate-Related Financial Risk, 86 Fed. Reg. 27,967 (May 25, 2021).

[4] Financial Stability Oversight Council, Report on Climate-Related Financial Risk 2021, Oct. 21, 2021,

[5] Chris Stipes, New Report Details Impact of Winter Storm Uri on Texans:  UH Hobby School Survey Finds Widespread Disapproval of ERCOT, Majority Oppose Paying Fee for Generator Weatherization, Mar. 29, 2021,

[6] Jess Donald, Office of the Texas Comptroller of Public Accounts, Winter Storm Uri 2021:  The Economic Impact of the Storm (Oct. 2021),

[7] Texas Section of the American Society of Civil Engineers, Reliability and Resilience in the Balance:  Building sustainable infrastructure for a reliable future:  A vision beyond Winter Storms Uri and Viola, Feb. 16, 2022,

[8] Julián Aguilar, Cost of last year’s winter storm could reach $300 billion new report says, The Texas Newsroom, Feb. 16, 2022,

[9] See Rebuilding Trust in Carbon Offsets Faces Uphill Battle, The Wall Street Journal, July 12, 2023,

[10] Peter Malyshev, Partner, Cadwalader, Wickersham & Taft LLP, Panel Presentation at the CFTC’s MRAC meeting (July 10, 2023),

[11] Id.