By Virginia Furness
LONDON, –
The Commodity Futures Trading Commission is investigating greenwashing as part of its crackdown on fraud and misconduct in voluntary carbon markets, a commissioner at the US regulator said on Monday.
The investigation into false claims about the environmental benefits of carbon credits, as well as the green credibility of financial products, comes as the CFTC releases its first set of federal guidance on voluntary carbon credit derivatives.
Regulators are trying to introduce standards and curb manipulation in a market that has operated without federal oversight.
The CFTC is investigating activities under its Environmental Fraud Task Force, which it launched in June 2023, to address fraud and manipulation in carbon credit markets and other forms of greenwashing, such as environmental misrepresentations of investment strategies, society and corporate governance.
“The idea is to take out the bad actors that could impact the derivatives market, we would do that with any commodity,” CFTC Commissioner Christy Goldsmith Romero told Reuters on the sidelines of a conference in London.
Goldsmith Romero said the watchdog had not yet filed a case, but said several activities were “actively investigated.”
In June, the CFTC said it was seeking tips from whistleblowers about possible violations of the Commodity Exchange Act related to fraud in carbon markets.
The Securities and Exchange Commission, often seen as the CFTC’s sister agency, is also cracking down on fund greenwashing.
After concluding public consultation in February, the CFTC aims to finalize these guidelines by the end of 2024, Goldsmith Romero said.
The US watchdog has been guided by the Integrity Council for Voluntary Carbon’s Markets Core Carbon Principles, an industry initiative tasked with raising standards in voluntary carbon markets.
The CFTC has regulatory authority over carbon credit derivatives traded on its exchanges, as well as anti-fraud authority over the underlying credit, giving it an interest in voluntary carbon markets.
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