The International Organization of Securities Commissions (IOSCO) has been active in ESG matters recently. It published its final report on Compliance Carbon Markets. The findings in the report build “upon the lessons learned from existing compliance carbon markets and good practices in commodity derivatives markets, this report delves into both primary markets and secondary markets considerations, spot and derivatives trading”:
“This report suggests the same comprehensive oversight that promotes transparency and integrity in commodities markets could be applicable to CCMs as well… The report includes a total of twelve recommendations relating to primary market functioning, transparency and predictability of primary market decisions; market structures for primary markets, covering allowance allocation mechanisms, market stability mechanisms and primary market access; and secondary market functioning, with particular focus on market integrity, transparency and structure.
Finally, the report includes a section on international carbon markets and a unique carbon price, to consider mechanisms that would, over time, lead to a consistent price for carbon globally.”
IOSCOs work may help improve the viability of carbon markets – if their recommendations are implemented by regulators and market participants. This is something to watch.
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