Following natural disasters, credit unions traditionally step in to help members regain their footing through low-interest loans, lines of credit and other emergency initiatives. But the same climate risks can affect the credit unions as well.
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Taylor Nelms, senior director of research for the Madison, Wisconsin-based Filene and one of the lead authors of the report, said that beyond
These risks, the report said, include physical property risk "due to acute and chronic climate-related weather events and hazards," as well as "transitional risks" from exposure to industries that generate high carbon emissions as the economy and consumers move away from those sectors. "Credit unions across the country already have experienced the devastating impacts of climate-related disasters like hurricanes and wildfires," the report said.
For credit unions to accelerate their climate risk management — while cultivating new ways to serve members — researchers with both Filene and Ceres offer several actionable steps. These include publicly acknowledging the risks, educating staff and members, collecting climate-related data to better assess risk, investing in climate adaptation strategies, running scenario analyses within loan portfolios and partnering with other credit unions, trade groups and policymakers on collaborative solutions.
Outside of efforts by
How credit unions are dealing with the risks
Trena Ellis, vice president of facilities at the $4.5 billion-asset SAFE Credit Union in Folsom, California, says her credit union is limited in the immediate macro steps they can take to transition to a more ecologically sustainable branch network due to having some aging brick-and-mortar locations. But she is working to incorporate green features such as energy-efficient HVAC units, retrofitted LED lights and furniture sourced from recycled materials in offices moving forward.
For both novel locations and prior branches being refurbished, many sustainable measures are "iterative. … It's over time that we're able to do it,” Ellis said.
On a national scale, those at the helm of trade organizations such as the National Credit Union Foundation are working to help credit unions coordinate a planned response to the expected rises in disaster frequency and cost.
Chad Helminak, director of programs and impact at the foundation, said that in the past decade, he's noticed more credit union leaders proactively looking at climate risk and sustainability as strategic priorities.
"We're going to see more disasters, as the Filene report called out,” he said. "We're going to see the cost of recovery from those disasters continue to rise."
In 2006, the foundation created the CUAid disaster relief fund, which
Jessica Johnson, assistant vice president of risk management at the $3.5 billion-asset Numerica Credit Union in Spokane Valley, Washington, understands the need for robust planning from firsthand experience. Every year, Johnson dreads the coming of summer, when smoke blown in from California and Washington fires fills the air. She noticed wildfires have increased in the region since around 2015.
"Our members have been impacted by losses of their homes or even losses of their crops or their businesses, and us ourselves," she said. On occasion, Numerica closed branches temporarily to keep employees safe from the fires, although the closures lasted at most for one or two days, she said.
Numerica invested heavily in digital banking to support members who can't walk to a branch when facing fire or smoke hazards. "They can still access their bill pay, they can transfer funds, they can do video banking, they can even reach out to our digital experience center to talk through their needs. And we can deploy those employees elsewhere if their personal homes are in imminent danger," Johnson said.
The credit union has also created a playbook for natural disasters, built a phone tree for crisis communication, opened a catastrophe loan fund and watches other credit unions around the country to get other ideas on how to improve on reaction and prevention, Johnson said.
Johnson also stressed Numerica's interest in financing prevention of climate risks and explained that, despite the broad impact of ecological change, economically vulnerable people, including marginalized communities and people of color will be hit hardest by natural disasters and face increased difficulties when seeking financial aid.
"This is where we need to step in … By nature, credit unions are created to serve local communities, especially those that may have limited financial services," Johnson said.
In addition to strategic guides and emergency funds, some credit unions offer travel incentives for employees who commute to work as a means of reducing carbon emissions and promoting the use of public transport.
The $7.6 billion-asset Redwood Credit Union in Santa Rosa, California — which was a sponsor of the report — is one of them. Brett Martinez, president and chief executive, said Redwood has outfitted new buildings with electric vehicle charging stations, while offering financial benefits to employees who use mass transit. Redwood has an internal Green Committee focused on environmental stewardship, he said, and partners with local environmental organizations. Its Santa Rosa headquarters pulls more than 60% of its power from rooftop solar panels, he said.
Redwood also offers members discounted loans on sustainable transportation methods like bikes, hybrid and electric vehicles; paperless banking; and online tools to teach sustainable practices, Martinez said.
Redwood saw several members and employees lose their homes to fires in the past decade. Martinez said the credit union stepped up in the wake of fires in 2015 and 2016 to offer zero-interest loans, temporary childcare, housing and meals for displaced staff and donated emergency funds to area survivors, sourced from a nonprofit fire relief fund it created through a partnership with state Sen. Mike McGuire and local news organization The Press Democrat. When a similar fire occurred in 2019, leaving millions without power, Redwood stayed open, operating their branches with generators and air purifiers, he said. "We were there when our community needed us most," he said, attributing the response to coordinated planning.
"Credit unions are founded on the principle of ‘people helping people,’ and being there for our members, employees and communities during a disaster or crisis is the truest way to demonstrate our commitment to this philosophy," Martinez said.
