This research report, produced jointly by Filene Research Institute and the Ceres Accelerator for Sustainable Capital Markets, offers an overview of the implications of climate change for credit unions, as well as recommendations for more effective climate risk management. It describes the climate-related physical and transition risks facing credit unions, the potential impact of climate change on credit unions, the current state of credit union approaches to climate change, and the opportunities available for credit unions from climate adaptation finance.
Credit unions have an essential role to play as financial system stakeholders mobilize to address climate change and the challenges it creates and, ultimately, as the United States undertakes a transition to a net zero carbon emission economy.
The report offers seven action steps for credit unions to address climate risk. They include:
Publicly acknowledge that climate change poses a risk to their balance sheet and to their members.
Conduct research and educate themselves, their members, and other stakeholders about climate-related risks and opportunities facing their organizations.
Begin collecting climate-relevant data for their organization.
Adopt the recommendations of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD).
Conduct climate scenario analysis of their loan portfolios.
Invest in their organizations while leveraging partnerships and building system-wide resources.
Foster proactive communication among credit unions, national trade associations, state leagues, policymakers, and state and federal regulators.
Download the full report for an overview of the implications of climate change for credit unions, the risks facing credit unions, and the opportunities available for credit unions to adapt their strategies toward advancing climate solutions. With concrete actions and a supportive regulatory framework, credit unions can move to mitigate risks in their portfolios, prepare for climate- related events, and accelerate development of loan products to finance clean and renewable energy.