On vote of 2-1, NCUA Board issues climate-change RFI

A request for information (RFI) on climate-related financial risk to insured credit unions, related entities, their members, and the National Credit Union Share Insurance Fund (NCUSIF) was released by the federal credit union regulator’s board Thursday on a vote of 2-1.

The National Credit Union Administration (NCUA) said it is seeking input that would strengthen its ability to identify and assess credit unions’ current and future climate and natural disaster risks; and stakeholder comments on opportunities to enhance its supervision and regulation of each regulated entity’s management of such risks.

“In addition to seeking stakeholders’ views and experiences on the current and future climate and natural disaster risks faced by federally insured credit unions, commenters are encouraged to provide comments on any and all relevant issues they believe the Board should consider with respect to the financial risks associated with climate change,” it said in an announcement of Thursday’s action. “This includes, but is not limited to, risks posed to, or stemming from, field of membership, lending, investments, other assets, deposits, underwriting standards, insurance coverage, liquidity, and capital.”

In its RFI, the agency divides climate-related financial risks into two broad categories of risk. Briefly repeated here, they include physical risk, including harm to people and property, related to climate events and trends; and transition risk, including impact on institutions or sectors caused by measures taken to move towards a less carbon-intensive economy.

The RFI, out for a 60-day comment period, invites responses to 38 questions across the following categories: physical risk, transition risk, operations, governance, business strategies, risk management, reporting and targets, climate-related opportunities, suggestions for the NCUA, data gathering, and questions for the NCUA.

The RFI also discusses potential outcomes of an increased understanding of climate-related financial risks, among them possible impacts in the way the agency regulates and supervises federally insured institutions, field-of-membership considerations, and how the agency works with those particularly likely to face harm from climate events.

“Just as credit unions must continue to adapt to account for climate-related financial risks, the NCUA will need to evolve its understanding of the impact on credit unions, credit union members, the credit union system, and the SIF,” the agency RFI states in a summary prefacing its questions. “The information collected from the responses to the questions below will assist the agency in developing tools to identify and assess current and future risks to FICUs and the SIF. Stakeholder feedback will also inform the agency’s future decisions on the best way to address these risks. And, the responses of interested parties will allow the agency to better understand how credit union members may be affected by these risks.”

Voting in favor of issuing the RFI were from NCUA Board Chairman Todd Harper (D) and Board Member Rodney Hood (R); voting against was Board Vice Chairman Kyle Hauptman (R).

The action comes one day following the agency’s release of a “research note” addressing credit unions’ exposure to climate-related risks, particularly in Florida, Texas, and California.

The board members’ statements are linked below.

NCUA RFI (draft for Federal Register)

Release: NCUA Board Approves Request for Information on Climate Financial Risk

Harper statement

Hauptman statement

Hood statement