.png)
.png)
.png)
.png)
Table of contents
Despite report findings and recommendations, action at agency currently appears unlikely.
The National Credit Union Administration (NCUA) is behind other banking agencies in evaluating the potential risks climate change poses to the financial institutions it regulates, the Ceres Accelerator for Sustainable Capital Markets said, in its latest scorecard of banking regulators.
“Other banking regulators, including the Federal Reserve, have taken initial steps to assess how climate change can affect their covered institutions,” Ceres stated in its report. “The NCUA could follow suit for credit unions and develop guidance on how they should integrate climate change into their risk management, internal controls, business strategies, governance, and disclosure practices.”
Among other things, Ceres, a non-profit sustainability advocacy organization, monitors regulators, pressing them on taking climate change into account as they develop rules and examine financial institutions.
“A new scorecard released today by Ceres shows that U.S. financial regulators across nine federal agencies have taken 230 actions since April 2021 to tackle the financial risks of climate change, a clear sign of regulatory progress,” the group announced earlier this week.
They added, however, that the U.S. is behind some other nations in assessing the risks climate change poses to financial institutions.
The group also noted that in October, the Financial Stability Oversight Council (FSOC) issued a report acknowledging for the first time that climate change is an emerging risk to the U.S. financial system.
The NCUA and Climate Change
The NCUA is a member of FSOC and as chairman of the agency’s board, Todd Harper endorsed the report and its recommendations. However, Harper is a Democrat and the other two members of the NCUA board, Kyle Hauptman and Rodney Hood, are Republicans. Hauptman and Hood have said climate risk is an issue that individual credit unions might address, and additionally that the NCUA should not include an evaluation of climate risk as part of its exams nor issue a rule on the matter.
Ceres said it has provided the NCUA with specific recommendations on dealing with climate risks, including asking the agency to consider:
–Modernizing risk definitions as part of the credit union supervision process to include climate risks.
–Integrating guidance on climate-informed supervision into the examination manual and the process for chartering new credit unions.
The group further stated the NCUA should address the disproportionate climate risks facing low- and moderate-income communities and communities of color. Ceres noted that only one agency has made notable progress on addressing the impact of climate change on financially vulnerable communities, while several, including the NCUA, have not publicly addressed the issue.
With the current makeup of the NCUA board, the agency is unlikely to be able to adopt the policies advocated by Ceres.
Industry News
