Center for American Progress

RELEASE: How Regulators Can Help Credit Unions Manage Climate Risk
Press Release

RELEASE: How Regulators Can Help Credit Unions Manage Climate Risk

Washington, D.C. — More than one-third of the U.S. population relies on federally insured credit unions for financial services, which often face higher financial risk due to the increased likelihood of climate-related disasters. A new CAP column outlines new actions the National Credit Union Administration (NCUA) should take to help credit unions address climate-related financial risk and strengthen guidance and regulation for green lending so that credit unions can serve their members and communities. 

Credit unions primarily serve middle- and low-income communities. Nearly half of all loans made are tied to real estate, and one-third of loans are for automobiles, putting climate-induced risks as a top financial concern for credit unions. These disasters could affect $141 billion in assets held by credit unions. To ensure that they can properly serve their communities, credit unions need increased support from the NCUA to sufficiently address growing climate-related risks. This new CAP column offers new recommendations for the NCUA to best support credit unions and prepare both credit unions and their members for future climate-related disasters. Some of the recommendations include: 

  • Building off of existing guidance, the NCUA should propose climate-related financial risk management principles and guidance for differently sized depository institutions. 
  • The NCUA should require credit unions to publicly disclose information about their climate-related financial risks in reports to incentivize credit unions to reduce exposure, better manage risks, and help the NCUA monitor and regulate climate-related financial risks. 
  • The NCUA should create new guidance and education to boost credit unions’ ability to help their members through future climate-related disasters. 

“As climate-induced events pose greater risks to members’ houses, cars, and other investments, it’s up to the NCUA to take action and build capacity for credit unions when it comes to climate-related financial risk. These recommendations would help credit unions better support their communities now and for years to come,” said Crystal Weise, research associate for Inclusive Economy and co-author of the column. 

“Unlike other financial institutions, credit unions’ strong personal relationships with their members and communities give credit unions a unique vantage point on how to take action when disaster strikes. The NCUA must make sure that credit unions have the resources to address climate-related financial risk,” said David Correa, research assistant for Inclusive Economy and co-author of the column. 

Read the column: How Regulators Can Help Credit Unions Manage Climate Risk in the Communities They Serve” by Crystal Weise and David Correa 

For more information or to speak with an expert, please contact Sarah Nadeau at [email protected].

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