CHICAGO--(BUSINESS WIRE)--The American Financial Exchange (AFX), an electronic exchange for direct lending and borrowing for U.S. banks and financial institutions, today announced its commitment to be carbon-neutral, offsetting its emissions on a yearly basis starting from January 1, 2020. With the support of Climate Vault, a non-profit founded at the University of Chicago with a mission to significantly reduce and eliminate CO2 emissions, AFX will calculate, then reduce or offset, all of its Scope 1, 2 and 3 emissions. These activities to address climate change will make AMERIBOR®, the oldest Libor alternative, the world’s first carbon-neutral interest rate benchmark.
AFX facilitates the determination of AMERIBOR®, which is calculated as the weighted average daily volume in the AFX overnight unsecured loan market. Futures on the forward-looking AMERIBOR® Term-30 began on Cboe Futures Exchange on September 13, 2021. More information can be found at ameribor.net.
As well as committing to offsetting emissions on an ongoing basis, AFX has also neutralized its historical emissions. In close collaboration with environmental markets advisors Evolution Markets Inc., AFX calculated the carbon footprint from 2015 to 2021 of its Scope 1 direct greenhouse gas emissions and Scope 2 indirect emissions associated with the goods and services acquired by the organization. AFX has also calculated its Scope 3 indirect emissions from air travel from the year 2020.
AFX worked with Evolution Markets to determine a level of contribution to Climate Vault sufficient to offset all emissions it cannot reduce directly. Climate Vault plans to use these contributions to purchase CO2 permits on regulated cap-and-trade compliance markets and will “vault” them. This will effectively lower the cap on CO2 emissions in those markets, thereby reducing emissions in a way that delivers a quantifiable, verifiable offset. Climate Vault also supports the development of cutting-edge carbon dioxide removal (CDR) technologies with the guidance of its Technology Experts Chamber, chaired by former Energy Secretary Ernest Moniz.
“Today AFX and AMERIBOR have taken the important step of going carbon neutral,” said Dr. Richard L. Sandor, chairman and CEO of AFX. “We want to send a message that we live up to our core values of “commercial logic with social value.” We intend to continue our commitment by continuously incorporating our Scope 1, 2, and 3 emissions in future calculations; and improve and refine data collection and calculation of Scope 1, 2 and 3 since inception.”
“Climate Vault and AFX are both leaders in their domains, and I’m thrilled to collaborate with Richard and the AFX team to help make AMERIBOR® the first carbon-neutral interest rate benchmark in the world,” said Michael Greenstone, Milton Friedman Distinguished Service Professor of Economics at the University of Chicago and Co-Founder of Climate Vault. “Finding solutions to society’s growing carbon emissions problem is among the most urgent issues of our time, and we’re proud to have the support of AFX and others in the financial community in their commitments to reduce their carbon footprint in a transparent and verifiable way.”
“By adopting a rigorous process to measure and ultimately offset the institution’s historic carbon footprint, AFX is setting the industry standard for positive action to address global climate change,” said Andrew Ertel, founder and CEO of Evolution Markets. “AFX’s further commitment to calculate and then reduce or offset all its direct and indirect emissions stands as a beacon for financial market operators to follow.”
Currently AFX membership across the U.S. includes 181 banks, and 1,000 correspondents, with combined assets of over $5.8 trillion. There are 45 non-banks that include insurance companies, broker-dealers, private equity firms, hedge funds, futures commission merchants, and asset managers.
The American Financial Exchange (AFX) was conceived of in 2011, initiated patent application in 2012 and published “Libor is Giving Derivatives a Bad Name” in September 2012, incorporated in 2014 and began electronic trading in 2015. AFX is a self-regulated exchange, with 221 members across the 50 U.S. states. AFX offers a suite of innovative products to improve transparency and efficiency in the current interbank loans marketplace. AFX also facilitates the determination of a market-based interest rate benchmark called the American Interbank Offered Rate (AMERIBOR®). AMERIBOR® is an interest rate benchmark that reflects the actual unsecured borrowing costs of more than 1,000 American banks and financial institutions. In addition, AFX’s AMERIBOR® is in alignment with all nineteen Principles set forth by the International Organization of Securities Commission (IOSCO) for Financial Benchmarks.
About Climate Vault
Founded at the University of Chicago, Climate Vault is a Delaware-incorporated non-stock, not-for-profit organization with a pending 501(c)(3) tax-exempt application. Climate Vault works with individuals and organizations to reduce their carbon footprint by using cap-and-trade compliance markets to purchase and “vault” CO2 permits to provide a quantifiable, verifiable offset. Climate Vault will then use the value of the permits to support cutting-edge carbon removal technologies to remove pollution already in the atmosphere. Visit www.ClimateVault.org to learn more, calculate your individual footprint, and help your organization or financial portfolio reach net zero. Join the climate conversation by following us on Facebook, Twitter, and LinkedIn.
About EVOLUTION MARKETS
Founded in 2000 under the motto “Saving the Planet, One Trade at a Time™”, Evolution Markets Inc. has assisted clients for more than two decades in meeting climate challenges through flexible, efficient, and market-based approaches. Evolution Markets Corporate Environmental Solutions supports our corporate and institutional clients all along their journey to carbon neutrality. Our experienced environmental markets professionals measure your carbon footprint, formulate a comprehensive plan to reduce and eventually eliminate it, then execute the plan efficiently and cost-effectively.