A subcommittee of the CFTC Market Risk Advisory Committee ("MRAC") recommended that U.S. regulators take action to address the risks that climate change poses to the U.S. financial system.

The recommendations came in a report, titled Managing Climate Risk in the U.S. Financial System, issued by the MRAC Climate-Related Market Risk Subcommittee. CFTC Commissioner Rostin Behnam, the sponsor of the MRAC, suggested the report could be used by "policymakers, regulators, and stakeholders" to begin a process of "taking thoughtful and intentional steps toward building a climate-resilient financial system that prepares our country for the decades to come."

The report presents 53 recommendations to mitigate risks to financial markets posed by climate change and concludes, among other things, that:

  • climate change poses a "major risk to the stability of the U.S. financial system and to its ability to sustain the American economy";

  • regulators "must" recognize that climate changes poses "serious emerging risks" and should move "urgently and decisively to measure, understand, and address these risks";

  • existing law provides U.S. financial regulators with significant authority that could be used to begin addressing financial climate-related risk;

  • regulators can help promote the role of financial markets as providers of solutions to climate-related risks; and

  • financial innovation is required to manage climate risk and to facilitate the flow of capital in order to help "accelerate net-zero transition and increase economic opportunity."

The report was approved 34-0 by the subcommittee's membership. The CFTC also posted statements from participants on the subcommittee: (1) Cargill, (2) Citi, JP Morgan and Morgan Stanley, (3) CME Group, (4) ConocoPhillips and (5) Vanguard.