NCUA Requests Feedback on Climate-related Financial Risks

The National Credit Union Administration ("NCUA") requested feedback on climate-related financial risks facing federally insured credit unions and the National Credit Union Share Insurance Fund.

In a request for comment on climate-related risk areas, NCUA highlighted its concern about the (i) harm to people and property as a result of natural disasters ("Physical risk") and (ii) stress on institutions as they take measures to move toward a less carbon-intensive economy ("Transition risk").

  • Physical and Transition Risk. NCUA asked for information on climate-related physical risks and transition risks, respectively, regarding (i) how risks, if any, affect the industry, (ii) risk management strategies that institutions could implement, and (iii) the impact that the respective risks have on credit union members and financially vulnerable populations. NCUA asked commenters to identify which products and services credit unions offer in response to physical and transition risk, such as renewable energy loan products and services and if additional support is needed to be able to offer these products.
  • Operations. NCUA requested input on operational adjustments that could be made by credit unions, as to supply chains, third-party relationships, new products and service offerings.
  • Governance. NCUA asked for information on (i) the role of a credit union’s board of governors to monitor financial risks as a result of climate change and how those risks are incorporated into their overall risk management framework, and (ii) whether a credit union appoints board members responsible for overseeing climate-related financial risks, barriers to designating members, and the extent of members’ knowledge who are designated on climate-related financial risk.
  • Business Strategies. NCUA asked whether credit unions consider the impact of climate-related financial risks with regard to business strategy implementation, in addition to product and services offerings. NCUA also asked if credit unions have the knowledge necessary to assess these impacts.
  • Risk Management. NCUA requested information on how credit unions can identify climate-related financial risk and assess (i) the impact, (ii) whether the impact on financially vulnerable populations should be considered and (iii) if a credit union does not currently consider climate-related risks, whether it anticipates doing so soon.

NCUA also welcomed feedback on ways in which NCUA can provide related support to credit unions, such as sharing industry best practices, guidance on risk management and holding workshops.

Comments are due 60 days after publication in the Federal Register.

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