NEW ORLEANS – Jesse M. Keenan, an associate professor of real estate in the Tulane School of Architecture, helped edit a report published by the U.S. Commodity Futures Trading Commission on climate risk to the U.S. financial system. Titled Managing Climate Risk in the U.S. Financial System, the report outlines a path forward for shaping the economy in a way that seeks to advance a more sustainable and equitable future. Keenan worked with Leonardo Diaz-Martinez, a former deputy assistant secretary for energy and environment in the U.S. Department of the Treasury.
Keenan said the report is the first comprehensive climate change publication by a U.S. financial regulator.
In addition to Keenan, the report’s 35 authors represent such companies and organizations as Morgan Stanley, Citigroup, JP Morgan Chase, BP, Vanguard, the Environmental Defense Fund, World Resources Institute and the Nature Conservancy.
As an expert on climate risk and financial systems, Keenan has served as a special government employee advisor to the U.S. Commodity Futures Trading Commission while helping edit the publication. Keenan formerly led climate adaptation research initiatives at the Federal Reserve Bank of San Francisco.
“This publication represents a watershed moment for this country in rising to the challenge of addressing climate change,” said Keenan. “Our work highlights that climate change is a dire concern for both Wall Street and Main Street.”
The report, which will be presented to Congress, addresses the role of U.S. financial regulators within existing regulatory frameworks and how those frameworks, including laws and regulations, can be adapted to better manage climate risk and take advantage of new opportunities for investing in a net-zero economy.
It includes an examination of what foreign governments and global financial institutions are doing to address climate risks and how these practices and ideas can be applied in the U.S. financial system. In addition, it includes recommendations on how firms can adapt to climate change through corporate disclosure, stress testing, scenario modeling, risk management and practices that advance organizational resilience.
“The findings of this publication contribute to an emerging understanding of climate change as a systematic financial risk that threatens our long-term financial well-being,” said Keenan. “Congress now has a roadmap for not only addressing climate change, but also how to invest in a global transition. As a faculty member in the School of Architecture, this work is particularly important because it is the asset classes associated with housing, real estate and infrastructure that are on the frontlines of climate risk exposure. However, this report also highlights that it is frontline communities that have the most to lose if we do not adapt our financial and regulatory systems to address climate change and environmental injustice.”
