The National Credit Union Administration has revised its strategic plan to clarify that the agency will not take regulatory action based on “climate-related financial risks” to discourage credit unions from lending to “family farms and others in the agricultural sector as well than to companies linked to the fossil fuel industry.
The National Credit Union Administration, an independent federal agency that insures deposits with credit unions and regulates them the same way the Federal Deposit Insurance Corporation regulates banks, released multi-year strategic plans last fall that “outline NCUA’s strategic and performance objectives as well as the critical factors that influence the achievement of those objectives.
A section of the draft strategic plan, titled “Climate-Related Financial Risks,” explained that credit unions are often tied to particular industries or communities, and whether those industries or communities have severe impacts from climate change or regulations aimed at reducing the effects of climate change, credit unions could suffer.
“To remain resilient, credit unions may need to consider adjustments to their membership areas as well as the types of loan products they offer,” the project says.
Although this part remains in the new version of the plan, the strategic plan now includes a section indicating that the NCUA board does not want to discourage lending to industries that may be affected by climate change:
“Credit unions, not the NCUA, are in the best position to assess various risks and opportunities in their area of membership. Credit unions will have to make their own decisions about diversifying and expanding membership. The agency does not intend to micromanage credit union lending decisions for climate financial risk, including lending to family farms and others in the agricultural sector as well as businesses related to the food industry. fossil fuels. The NCUA Board of Directors emphasizes that nothing in this strategic plan should be interpreted as discouraging agriculture or fossil fuel-related activities.
A number of North Dakota officials spoke about the original draft text and asked the NCUA to rethink it, including Governor Doug Burgum, members of the congressional delegation, and Jeff Olson, CEO of the Dakota Credit Union Association. , the professional association of the financial trade. serving 69 credit unions in North Dakota and South Dakota.
However, even as officials spoke out against the language, NCUA President Todd M. Harper denied in a statement that the strategic plan would prevent credit unions from lending to agricultural producers, using language which closely mirrors that found in the strategic plan.
“The NCUA will not micromanage any loans for climate finance risk. This includes lending to family farms and others in the agricultural sector, as well as businesses related to the fossil fuel industry,” Harper said in January. “Furthermore, any changes in NCUA policy and oversight related to climate financial risk must be accepted by Action from the NCUA Board of Directors.
Burgum, in a Thursday, March 18 statement, said he would have preferred to see climate risk language removed entirely.
“We appreciate the NCUA Board of Directors clarifying its position so that credit unions know they can continue to provide financial services to our farmers, ranchers and energy industry without fear that such activity don’t put them in the crosshairs of federal regulators,” he said. “North Dakota continues to be a leader in carbon capture, use, and storage efforts, recognizing that carbon neutrality can only be achieved through innovation, not regulation.”
Senator John Hoeven also applauded the news.
“Farmers and ranchers not only serve as the backbone of North Dakota’s economy, they help ensure that every American continues to have access to the highest quality, cheapest food supply in the world,” did he declare. “As such, agricultural producers in our country deserve our support, and we appreciate the NCUA addressing our concerns and making it clear that credit unions will not be discouraged from lending to actors in the agricultural sector.”