ESG Update

  • 13 Oct 2022
  • By CME Group

Listing schedule expansion for N-GEO futures

Effective October 24, participants using Nature-Based Global Emissions Offset (N-GEO) futures will have the opportunity to trade out two years further to December 2027. This was announced after increased trading activity was seen in the Dec-24 and Dec-25 contract months, and traders sought to extend their positions further out the curve. Currently, the Dec-22 contract accounts for 43% of N-GEO open interest, while the Dec-25 contract already accounts for 5%.

Since their launch in March 2021, CME Group Voluntary Carbon Emissions Offset futures have experienced substantial growth as they attract traders across a variety of market sectors. Collectively, N-GEO, C-GEO, and GEO futures have achieved the following milestones:

  • Over 200K contracts traded, equating to 200M metric tons of CO2 offsets traded on CME Group
  • Over 100 unique participants across all three nature- and tech-based contracts
  • Over 10.6M carbon offsets delivered in 15 successful delivery cycles
  • Over 1K average daily volume and 18.1K in open interest in Q3 2022

*Data as of September 27, 2022

Source: CME Group

E-mini S&P 500 ESG futures volume reach new heights

Market participants are embracing the liquidity in E-mini S&P 500 ESG futures. Trading activity continues to gain momentum, culminating in record ADV of 2,760 contracts in September, up 326% vs. August. Since launch, over 30 countries have submitted trades

Launched over a year ago, E-mini S&P Europe 350 ESG futures have traded 3.6K total contracts. The futures are cash-settled to the S&P Europe 350 ESG Index, a Pan-European Index covering developed markets across over 15 countries. The index is considered compliant with Article 8 of the SFDR and uses the same methodology as the S&P 500 ESG Index.

Source: CME Group

Carbon markets driving price discovery

Carbon markets are becoming an indispensable tool in the climate fight, as companies turn to carbon offsets to shrink their carbon footprint. However, verification, pricing, and standardization are three challenges that face the voluntary carbon market. Futures contracts with surging trading volume could be the answer.

EV industry adopts Cobalt futures as a hedging tool

On October 11, Cobalt futures set a new volume record, trading 756 contracts and surpassing the previous record of 582 contracts. Open interest is also at an all-time high of 6,623 contracts, as of October 12, with the curve extending through Dec. 2025.

The contract is finding quick adoption from the marketplace, as the automotive sector seeks to manage commodity price risk in the transition to higher EV production volumes. Cobalt is a key component in many EV car battery models.

Recent market activity in Lithium futures

So far, 2022 has been dedicated to market education and outreach to the lithium market to introduce our futures contracts. CME Group joined the leading lithium industry association ILIA earlier this year. In September and October, it was encouraging to see recent market activity and recent trades in Lithium futures with 39 lots, or 39 metric tons, traded in our contract, establishing open interest well into next year.

The rapid growth of electric vehicles and large-scale battery storage applications for renewable energy is increasing lithium demand and thereby lithium price risk – Lithium futures offer price transparency and efficient risk management of that price risk.

Learn more about our suite of ESG futures

Manage the risk associated with renewable energies, environmental change, and sustainable investments with our ESG products.

ESG at CME Group

At CME Group, we believe in advancing policies that strengthen the integrity of our global company. Our sustainable solutions include the industry's first Sustainable Clearing service, voluntary carbon-offset tools, E-mini S&P 500 ESG futures, the world's most widely-used ESG equity futures contract, and more. Read our latest ESG report.