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The US derivatives watchdog has finalised the first federal guidelines for unregulated carbon offsets, as the Biden administration seeks to standardise a disorderly market in a bid to tackle climate change. 

The Commodity Futures Trading Commission adopted measures announced on Friday that ask exchanges to validate carbon offset derivatives, which base their prices on those of financial instruments bought by companies to offset emissions.

Treasury secretary Janet Yellen issued a statement on Friday praising the new guidelines as a means to “promote the integrity of carbon credits and enable greater liquidity and price transparency”.

The unregulated market for carbon credits is estimated to grow to $100bn by 2030, up from $2bn this year, according to Morgan Stanley. But the voluntary carbon derivatives market has languished, with only a handful of contracts attracting substantial trading volume due to concerns about credibility.

“We actually have a legal responsibility to ensure the health and transparency of both the derivative side, but also the underlying cash market,” CFTC chair Rostin Behnam told the Financial Times.

The guidelines, which were initially proposed in December, seek to crack down on manipulation and price distortions by pushing exchanges to ensure that voluntary carbon credit derivatives comply with CFTC regulation as well as US law. 

“With any project that has the scale that the carbon market is seeking, you’re going to have error rates, you’re going to have bad actors,” Behnam said. 

The CFTC voted 4-1 in favour of adopting the guidelines, with Summer Mersinger, one of the agency’s two Republican commissioners, voting against.

Boosting the reputation of carbon markets has been a political priority for the administration of US President Joe Biden, which sees carbon credits as a way to lure more private sector money into renewable energy and conservation.

While the credits have been initially popular among companies, they have also attracted criticism for failing to deliver the carbon removals they promise.

Earlier this summer, Treasury secretary Janet Yellen unveiled guidelines for developers selling credits, and for the companies buying them to offset emissions. Former US climate envoy John Kerry has also thrown his weight behind carbon credit markets, launching a state department-led initiative in 2022 aimed at decarbonising regional power sectors.

Despite the political momentum behind efforts to develop voluntary carbon markets, Behnam cautioned that the energy transition would “take decades”.

“This notion that we’re going to be able to just transition to renewables in the near future and not rely on carbon-based energy sources . . . it’s not reality, right?” said Behnam. “The transition is going to take time.”

The guidance puts the onus on exchanges registered with the agency to ensure the integrity of voluntary carbon credit derivatives.

Exchanges should consider whether a contract ensures that a project creates emission reductions that would not occur without it. They should also seek to ensure there is no “double-counting”, which occurs when multiple carbon credits are backed by the same trees, for example.

The guidance “will help professionalise and scale voluntary carbon markets,” said Mark Carney, the UN special envoy on climate action and finance and former Bank of England governor. “Other global regulators should now follow the CFTC’s lead.”

Guidance is not the same as regulation, a more powerful tool. But “it was pretty clear that a guidance document would be the best starting point . . . and one that would get support from a broad coalition of stakeholders”, Behnam said.

For years, the unregulated carbon market has suffered from greenwashing concerns, and the guidelines come as the market has narrowed. Derivatives exchange CME Group on August 30 said it would delist one of its futures products for emissions offsets that was launched only two years ago.

Recent surveys of carbon credit users have found worries about carbon offsets’ credibility has discouraged businesses from buying them, MSCI said in a September 19 report.

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I’ve always got a DIY project going on at home, so I’m a bit of a nerd when it comes to paint. There’s a textured paint that looks like stone, which I bought a while back to revamp my fireplace. This paint is fantastic, but pretty expensive. So when the company I ordered if from threw in the recommended natural bristle brush as a freebie, I was happy.

But when the paint arrived, there was no brush. Thinking it had been overlooked, I called the firm. I got through to one of the business owners who told me they’d run out. Fair enough, but it would have been nice to have been told. A simple ‘out of stock’ on the dispatch note would have done.

The free brush offer was also still listed on the website but when I pointed this out to the owner, she became defensive. This was just a small family-run business, I was told. The technology used to run the website couldn’t update these things automatically and they couldn’t afford an upgrade. They didn’t have the time to update these things manually either.

I love small businesses and I understand they don’t have it easy, but all this put me off as a customer. I tried to explain how this hadn’t created a good impression on me, a first-time customer, but it fell on deaf ears. I haven’t used this company since.

My experience with another small firm – an online business from which I’d ordered a glass clock – was so different. The owner had been let down on this by her European suppliers and was so apologetic and friendly that I was happy to wait for my order. I waited three months but in the end it needed to be cancelled due to the ongoing supply issues. I was disappointed, of course, but I was offered a discount on anything else I wanted from the website.

I mention those two contrasting experiences because of an experience I had recently while trying to help my mum with her banking. My mum is a younger pensioner and though still in the active retirement phase, she does have a few health issues that clip her wings. Like the hip pinning she had several years ago after slipping on some leaves. Walking long distances has got harder and she doesn’t drive.

When it comes to financial matters, the big problem is that my mum has never been comfortable talking on the phone about ‘official’ things. She gets nervous about what to say and doesn’t know how best to put things. And because she’s focusing on that, she doesn’t always take in what’s being said to her.

My dad used to deal with all that stuff and when he died, I started stepping in as I realised my mum needed a bit of help.

Requesting a new debit card for my mum from NatWest to replace one that had worn out should have been quick and easy. With mum and I both in the same room, GDPR should have been no problem to navigate. But everything about this call was painful and it took about 40 minutes.

My mum had lost her glasses and struggled when NatWest’s customer services agent insisted she read out her debit card number herself, as that was the required procedure. To tick that box, I had to read the number out to my mum, who then repeated it down the phone to the agent.

Then the agent discovered my mum’s phone number was out of date on the system and without that, she said there was nothing she could do. It was only when I asked whether the agent was aware of the Consumer Duty – to which I got no answer – and NatWest’s responsibilities towards vulnerable clients that we were passed to the over-60s helpline.

The agent there was brilliant but was still unable to send my mum a new debit card due to the out-of-date phone number. For that, mum was to visit a branch with some ID. It wasn’t ideal – the local branch has permanently closed and I’ve already explained mum’s difficulty with longer distances. Mum would potentially be left without access to cash because her debit card was unreliable. But at least we knew what to do.

When I got home, I decided to tell NatWest what had happened in an email. I was worried how my mum would have fared if she hadn’t had someone with financial services knowledge to speak up and get transferred to the over-60s helpline.

At this point, I have to give credit to NatWest. They swiftly apologised and started to investigate. Neil Wainwright, the firm’s customer protection manager, was amazing. He spoke to mum and me to get everything sorted without mum having to get to a physical branch. NatWest also gave mum some cash as a goodwill gesture and if we need anything else we just need to ask.

I told NatWest I was writing about our experience and asked for a response. A spokesman told me its staff are trained to recognise the differing needs of customers including vulnerabilities that may be present. “They have access to supportive guidance on how to help and can refer to the specialist teams we have available to support customers with more complex needs,” he said.

Customers can also tell the bank about any support they need through “Banking My Way”, a free service that can be used within its mobile app, online banking or by speaking to a member of staff.

But after listening back to our calls, NatWest acknowledged it let us down. “We had several opportunities throughout the discussion to give you both a better experience, including a missed opportunity to handover the call to Neil’s team,” the spokesman said. “As a result of your email we have arranged additional training to be given to the colleagues involved.”

All of us get it wrong sometimes – it’s the care and effort we take to put things right that really counts.

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India has given the Maldives a bailout that will help the island nation avoid an unprecedented sovereign default on an Islamic form of debt next month.

India’s biggest state-owned bank agreed to lend another $50mn to the Maldives, India’s high commission in the country said in a statement late on Thursday, days before the archipelago is due to pay a roughly $25mn coupon on an Islamic sukuk.

Sukuk follow Islamic principles in shunning traditional interest payments and instead offer creditors a share of profit from an underlying financial instrument.

No government has ever skipped a sukuk payment, but investors have grown concerned in recent weeks that the Maldives would break new ground in a market tapped by countries including Egypt, Pakistan, South Africa and the UK.

Heavy borrowing for infrastructure projects has plunged the Maldives deep into a foreign exchange crisis despite a recovery in tourism to the island paradise.

The Maldivian sukuk traded at about 78 cents in the dollar on Friday, a recovery from a low of 70 cents after Fitch Ratings downgraded the country’s credit rating deep into junk territory this month.

The State Bank of India, which had previously lent the Maldives $50mn, also rolled over a short-term bond in May, underlining how the archipelago is relying on stop-gap rescues by New Delhi while the government of President Mohamed Muizzu looks for a lasting solution to the crisis.

The country still has to find a way to repay more than $500mn in debt next year, and $1bn in 2026, when the $500mn sukuk will come due.

The loan from the SBI, which has taken the form of rolling over a one-year treasury bill, is bigger than the Maldives’ net international reserves as of last month. 

These dwindled to $48mn, out of gross reserves of $470mn, as the country faces high debt repayment bills and keeps up the rufiyaa currency’s peg to the dollar. India is one of the country’s biggest creditors, alongside China.

“These subscriptions have been made at the special request of the government of the Maldives as emergency financial assistance,” the Indian high commission said. The new T-bill would carry no interest payments, it added.

Muizzu campaigned for the Maldivian presidency last year on a pledge to reduce Indian influence in the archipelago, leading to an early spat with the government of Narendra Modi.

But the two countries have rebuilt ties as the Maldivian financial crisis has deepened. Muizzu’s office has said that he plans to visit Modi in New Delhi soon.

The government has said that it is also seeking a $400mn currency swap arrangement with India through a south Asian regional body.

This month the Chinese central bank said it had signed a memorandum of understanding with the Maldives to facilitate the settlement of trade in local currencies, in another sign of support.

Ever since Labour stormed to victory in the general election, it has been making the case it has inherited a sluggish economy and a set of public finances in tatters.

Now, the latest GDP figures for the UK suggest the former isn’t strictly true, while the latter is arguably being used to lay the groundwork for potentially unpopular tax rises to be announced at the upcoming Budget in October in order to bolster those public finances.

Already Labour has tightened the belt with various allowances either being scrapped or put under consultation. This has led to much speculation about what could be next, with inheritance tax (IHT) being touted as one area ripe for raiding.

Removing this relief could raise £1.1bn in the current tax year, with this rising to £1.6bn by the end of the decade

In particular, some are suggesting business relief on AIM shares should be removed to help raise revenue. Currently, if you hold investments in qualifying AIM companies for at least two years before you pass away, the assets are passed on free of IHT.

The Institute for Fiscal Studies estimates removing this relief could raise £1.1bn in the current tax year, with this rising to £1.6bn by the end of the decade. Not a huge amount and won’t help too much in addressing the chancellor’s £22bn ‘black hole’ but sizeable nonetheless.

That said, in the lead up to the election and soon after, Labour made economic growth a priority. Given AIM’s bias towards UK small- and medium-sized growth companies, removing the IHT benefits would somewhat go against this.

Firstly, any changes would likely be consulted on, giving people time to shift strategies and move assets away from AIM and into other investments or vehicles for mitigating IHT.

Over the past 29 years, more than £135bn has been raised by over 4,000 companies on AIM

This would have the subsequent effect of dragging share prices of these growth companies lower and eroding value in the UK stock market – hardly a positive incentive at a time when UK capital markets are already under intense pressure.

AIM has been a fantastic proving ground for a number of companies and there are a number of success stories, despite recent performance struggles. Over the past 29 years, more than £135bn has been raised by over 4,000 companies on AIM. It may be home to small-caps, but it has been a mighty contributor to UK GDP growth, innovation and employment over the years.

You have companies such as Breedon Group, a construction company based in Leicestershire, which listed on AIM in 2010 before moving to the main market last year. There are household names, such as Jet2 and YouGov, which have flown the flag for AIM over the years. Meanwhile, we are seeing a spate of acquisitions of AIM companies as private equity and corporates recognise their value at what are fairly depressed levels.

Any removal of investor incentives could harm these companies providing popular and vital services but which remain at an early stage in their growth.

Quality companies, regardless of their size, have enduring characteristics

We are also at a juncture in markets where small-cap stocks have a great opportunity to outperform. Rate cuts are beginning to be implemented, inflation is seemingly under control and AIM is coming off a tough couple of years. The companies of the future need to be nurtured, and while not every company in AIM benefits from an IHT premium, the whole market will be hit indiscriminately as a result of any changes.

Given investing is for the long term, and business relief comes in after just two years, it reasons that a number of people are not invested in AIM solely for the purpose of mitigating an IHT bill. It is important the government remembers that when deciding its next steps.

For advisers and investors with exposure to AIM, the best thing to do right now is keep calm and carry on. AIM has its IHT benefits and these will not be taken away overnight, but careful planning will still be needed to mitigate the tax implications for clients.

Let’s hope the government agrees and gets behind its own growth agenda

Most importantly, though, investing in AIM should not be considered solely as an IHT play. It remains an exciting and intriguing investment opportunity, particularly for clients with longer time horizons, giving them access to quality and well known companies that have the potential to grow and perhaps join the main market one day.

Quality companies, regardless of their size, have enduring characteristics. AIM is home to a number of these companies, so it is important growth is not stifled but embraced. Let’s hope the government agrees and gets behind its own growth agenda.

Amisha Chohan is head of small-cap strategy at Quilter Cheviot

Michael Jackson’s estate has initiated legal proceedings against a former associate of the late pop icon, who threatened to raise fresh allegations of inappropriate conduct just as it hopes a big-budget film will banish the child sex abuse claims that shadowed his later years.

The man and four others told the estate in about 2019, a decade after the singer’s death, that they might go public with allegations that he had acted inappropriately with some of them when they were children. 

In 2020, the estate quietly struck a previously unreported settlement worth nearly $20mn, under which the man and the other accusers agreed instead to defend Jackson’s reputation.

Now, the people managing Jackson’s music and image rights are accusing the man of fabricating his earlier claims while seeking to extract $213mn more in a new settlement with the estate, according to an arbitration claim. They have reported the matter to the US Attorney’s Office in Los Angeles.

Jackson’s estate is asking an arbitrator to award damages, order the accuser to abide by the terms of the 2020 deal and issue an injunction barring him from releasing details he previously agreed to keep secret.

The episode illustrates how Jackson’s interactions with children, which led to a criminal prosecution and at least one out-of-court settlement, continue to hang over his estate years after his death in 2009 from an overdose of sedatives and anaesthetic. The Jackson estate maintains the singer never engaged in inappropriate conduct with children.

The estate, which was initially $500mn in debt, has since amassed more than $3bn — a figure revealed by its executors in an interview with the Financial Times for the first time.

The change of fortunes has come through the sale of his music catalogue, a Broadway musical and Cirque du Soleil shows. The beneficiaries are Jackson’s three children, his mother and charities.

In an interview, John Branca, a longtime Jackson aide who co-manages the estate, said: “The time has come to stand up, take a stand, tell Michael’s story.”

The man allegedly making the claims against the Jackson estate did not respond to repeated requests for comment. He is not being named by the FT.

Jackson is one of the most successful but controversial figures in pop music history, springing to fame as a five-year-old with a soaring voice on the pop, soul and funk songs performed by his family band, The Jackson 5. He went on to record Thriller, which remains the best-selling album of all time more than 40 years after its release.

But he was also accused on multiple occasions of inappropriate conduct with children, beginning in the 1990s and continuing until his prosecution in 2005. Though the accusers’ accounts were at times contradictory and Jackson was acquitted in the court case, the allegations took a toll.

When he died, Jackson’s will gave Branca and music executive John McClain the responsibility of managing his estate. Branca has spent the past decade and a half working to restore the singer’s troubled finances and his complicated legacy.

The strategy suffered a setback after HBO’s 2019 documentary, Leaving Neverland, which featured the graphic accounts of two men, Wade Robson and James Safechuck, who alleged Jackson abused them as children.

Shortly after, the five unnamed accusers — who were not featured in the Neverland documentary — made their allegations. According to Jackson’s estate, the man had previously denied Jackson ever engaged in inappropriate conduct.

The estate agreed to settle those claims under what it has described as a “business decision”. The settlement deal, signed in January 2020, was styled as a purchase of their life rights and a consulting agreement, with each of the five accusers to receive $3.3mn over six years.

Since then, it is claimed, each of the accusers received $2.8mn. But in January, before the final $500,000 payment was made to each of them, the man notified the estate that he no longer planned to abide by the agreement, and that he was seeking $213mn in new payments.

The claim is that the man’s lawyers demanded a “substantive response” to their overture for more payments, and warned they would “be forced to expand the circle of knowledge” if the ultimatum was not met.

The demands came at the time the estate was finalising terms for the $600mn sale of a 50 per cent stake in Jackson’s music catalogue to Sony, valuing the total package at $1.2bn. The accuser’s lawyer asked the estate if it had disclosed his claim to Sony, raising the spectre of risk for the new owners of Jackson’s music and potentially affecting the deal’s value.

When Jackson died, his estate was saddled with debt after years of unsuccessful business practices and profligate spending.

Progress has been uneven in digging out of the hole; the Broadway show has grossed $216mn, according to Broadway World. But in the aftermath of Leaving Neverland, according to Branca, national commercials with Nike and two banks that each paid $1mn to $2mn a year evaporated and attendance at MGM’s Cirque show dropped for an extended period.

The estate laid low for a few years but is now taking a more assertive approach as it seeks to defend Jackson’s name. The biopic is being directed by Antoine Fuqua, with actor Miles Teller playing Branca.

“We survived Leaving Neverland but I’m not sure we could have with those additional allegations,” Branca said. His lawyers, he said, told him: “You have no choice. If these people come forward and make these allegations, then Michael is over, his legacy is over, the business is done.”

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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Volkswagen faced further pressure over its Xinjiang links as British parliamentarians called on the UK government to investigate the carmaker’s compliance with the country’s slavery laws following a Financial Times investigation into an audit of its factory in the Chinese region.

The FT on Thursday reported that the audit, which VW claimed cleared it of allegations of forced labour in Xinjiang, had in fact failed to meet international standards.

Sarah Champion, Labour MP and chair of the international development select committee, said: “There needs to be an investigation not only into Volkswagen but into supply chains of most major products.”

Champion, who is calling for stronger UK legislation to crackdown on forced labour in international supply chains, added that companies were turning a blind eye to human rights abuses in their supply chains as they prioritised commercial gains.

Liam Byrne, another Labour MP and chair of the House of Commons business and trade committee, said the issues with the audit provided “fresh evidence for why we need to quickly overhaul the UK’s modern slavery laws to deliver far tougher transparency through the supply chains of big firms”.

He urged the UK to introduce legislation similar to the US Uyghur Forced Labor Prevention Act or usher in a facility inspection regime that would give UK customers, suppliers and investors the protections they “want and need against the abuse of forced labour”.

Conservative MP Sir Iain Duncan Smith, co-chair of the hawkish Inter-Parliamentary Alliance on China, said he was planning to table a parliamentary question demanding that ministers examine the German company’s compliance with the UK’s Modern Slavery Act.

“Following the FT’s report, I am calling on the government to carry out a thorough investigation into VW’s supply chains,” Duncan Smith said.

Human rights groups in Xinjiang have documented widespread abuse against the mainly Muslim Uyghur ethnic group, with reports that hundreds of thousands of people were detained in the region from 2017 to 2019. Beijing has denied allegations of human rights abuses.

Under the 2015 slavery act, companies that supply UK customers must annually disclose what action they have taken to ensure no modern slavery exists in the business or its supply chains.

After pressure from human rights groups and investors, VW in December said that it had carried out an audit of its plant in Xinjiang, which is run by a joint venture with state-owned SAIC.

It said that the audit, carried out by Berlin-based consultancy Löning and an unnamed Chinese law firm, had applied the internationally renowned SA8000 standard and found “no indications of any use of forced labour”.

But a leaked document, which was also reviewed by Der Spiegel and ZDF, showed failures to comply with the standard.

The plant in Xinjiang has become a headache for VW amid growing tensions between Beijing and several western governments, including the US. Earlier this year, thousands of Porsche, Bentley and Audi cars were held up in US ports after a discovery of a Chinese subcomponent in the vehicles that breached the country’s anti-forced labour laws.

VW executives have remained reluctant to close the plant, which no longer produces cars and only employs 197 people, as this would risk harming the company’s lucrative relationship with SAIC.

It could also hurt the company in China, where consumers in the past have boycotted brands that acknowledge controversies in Xinjiang that Beijing vehemently denies.

Chinese consumers boycotted brands including H&M and Nike three years ago after they pledged not to buy Xinjiang cotton — a scenario that VW, which has already been losing share in its most profitable market, has been careful to avoid.

VW did not immediately respond to a request for comment on the development in the UK. The carmaker on Thursday said that it “always complies with legal requirements in its communications”, adding that “investors or the public have never been deceived”.

The UK Department for Business and Trade did not immediately respond to a request for comment.