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New Report Identifies Half of All Credit Union Industry Assets at High Risk from Climate Change

New Report Identifies Half of All Credit Union Industry Assets at High Risk from Climate Change

New Report Finds Half of All Credit Union Industry Assets at Risk From Climate Change

This report highlights the challenges and opportunities facing U.S. credit unions and offers clear action steps

Northampton MA –News Direct– Ceres

Ceres and Filene Research Institute released a new report revealing that thousands of credit unions in the United States are not adequately addressing the climate crisis-related risk. This analysis, which is the first of its type, provides insights into how credit unions can address the climate crisis, reduce their risks, and be part of a system-wide solution.

The report Credit Unions in a changing climate, finds that more than 60% of all credit unions—and at least $1.2 trillion in credit union assets—are at physical risk from climate change. They are at greater risk from extreme weather events like fires, floods and hurricanes. There is also increased transition risk due to changes in regulation, technology as well as legal, reputational and legal risks. Credit unions cannot ignore climate risks. 60% of U.S. credit cooperatives are located in vulnerable areas, and credit unions have $141 billion in assets from high risk industries that are changing due to climate change.

“Our report makes clear that thousands of credit unions, and the many underserved communities they serve, have significant and unaddressed risk arising from our rapidly changing climate,” said Steven M. Rothstein, Director of Ceres Accelerator For Sustainable Capital Markets at Ceres. “There are challenges and opportunities facing the credit union industry, both now and in the future. We hope that every credit union staff member, manager, director, and regulator will use this report and the recommendations we have outlined as a guide to inform their approach to addressing climate risk and protecting the financial savings of their members.”

“For it is only through immediate action that credit unions will become more prepared and benefit from the many growth opportunities in the markets for renewables, electric vehicle equipment, and other new and emerging sustainable technologies,” Rothstein added.

Credit unions offer a viable alternative to non-bank financial service providers and commercial banks. They are an integral part the U.S. consumer financing system. There are nearly five thousand credit cooperatives in the United States, which serve more than 130 millions people and have assets worth over $2 trillion. Credit unions are a cross-section of American households. They are not-for profit financial cooperatives that seek to balance growth with the mission of supporting local and regional communities. Many of these communities are unserved and more likely to be affected by climate catastrophes.

Unlike a bank that may have holdings across different industries and geographies, the report also points out that a credit union’s assets would be less diversified due to their field of membership, which is likely more geographically constrained.

“There is a wide range of perspectives among credit unions about how best to prepare for climate change, and climate change may not currently be at the top of the pile of strategic concerns at most credit unions,” said Taylor Nelms is Senior Director of Research at Filene Research Institute. “This report shows that it should be, because climate change poses great risks to credit union balance sheets and offers great opportunities for credit unions to differentiate, grow, and meet emerging consumer demands.”

“Some credit unions offer strong examples for their peers of how to adapt and turn risk into opportunity. Nelms said that the credit union system must address climate change together. This includes a coordinated and collaborative approach that includes the development of shared strategies and shared resource so that credit unions from all types can meet the deep challenges posed by climate.

This report comes as the world’s leading scientists warn that the window to act on the climate crisis is closing. The Intergovernmental Panel on Climate Change (IGPCC) stated in April that all sectors must be used to reduce global greenhouse gas (GHG), emissions by 2030 and limit the average temperature rise to 1.5 degrees Celsius. The U.S. suffered losses of $145 million in damages and 688 deaths from extreme weather events last year. It is estimated that 40% of U.S. residents lived in climate-related disaster-prone areas in 2021. More than 80% of those affected experienced heat waves.

The report provides seven steps credit unions can take to address climate risk. These include:

  • Publicly acknowledge the dangers of climate change to their financial health and that of their family members.

  • Conduct research and educate their members and other stakeholders about climate-related opportunities and risks facing their organizations.

  • Begin to collect climate-relevant data in order to improve their organization’s ability to respond.

  • Adopt the recommendations of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD).

  • Conduct climate scenario analysis on their loan portfolios.

  • Invest in their companies while leveraging partnerships to build system-wide resource.

  • Encourage communication between credit unions and national trade associations, state leagues policymakers and state and federal regulators.

Thursday, July 28, 2012 at 12:00 p.m. ET Ceres, Filene Research Institute and Ceres will host a virtual panelCredit union leaders to discuss the report’s findings and recommendations. RegisterIt is now open.

About Ceres Ceres is a nonprofit organization working with the most influential capital market leaders to solve the world’s greatest sustainability challenges. The Ceres Accelerator for Sustainable Capital Markets (Ceres Accelerator for Sustainable Capital Markets) is a center for excellence within Ceres. It aims at transforming the policies and practices that govern capital markets in order to reduce the worst financial effects of the climate change. It spurs action on climate change as a systemic financial risk—driving the large-scale behavior and systems change needed to achieve a net-zero emissions economy through key financial actors including investors, banks, and insurers. The Ceres Accelerator collaborates with corporate boards to improve climate change governance and other sustainability issues. For more information, please visit: these steps: @CeresNews.

About Filene Research Institute Filene Research InstituteThrough innovative research and incubation, strengthens organizations to improve consumer financial well being. As an independent cooperative finance think tank, Filene’s membership network connects a community of leaders and bright minds to change lives through innovation, truth and cooperation. Filene provides cutting-edge, actionable research and also offers incubators to scale and test solutions, events that spark organizations into action, and advisory services to accelerate and implement innovation. For more information, please visit @fileneresearch.

Media Contact Barbara Grady, [email protected], 510-334-2690

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