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More than 60 percent of U.S. credit unions could face physical risks from the effects of climate change, according to a new report from Ceres and the Filene Research Institute.

Ceres, a Boston-based nonprofit that examines sustainability challenges, said in a statement that thousands of U.S credit unions with combined assets of at least $1.2 trillion have “significant unaddressed risk” related to climate change. Ceres said the report provides the first analysis of its kind looking at how climate change could affect the credit union industry.

The report, “The Changing Climate for Credit Unions,” found that more than 60 percent of approximately 5,000 credit unions face physical or transition risks from climate change. These risks include the physical effects of extreme weather events, such as fires, floods and hurricanes, as well as transition risks, including from changes in regulation and technology, as well as legal and reputational risks, Ceres said.

“The report argues that it is incredibly risky for credit unions to ignore the climate threats with 60 percent of U.S. credit unions physically located in vulnerable locations and with credit unions having $141 billion in assets from high-risk industries that are evolving due to climate change,” Ceres said in the statement.

The report identified more than 11,000 credit union branches located in 668 counties considered at physical risk for the effects of acute and chronic climate-related weather events and hazards.

In analyzing transition risks – risks associated with a transition to a lower-carbon economy – the study looked at federally chartered credit unions with a field of membership that included companies or industries with high greenhouse gas emissions. These included companies involved with petroleum refining, manufacturing and utilities.

The study found that approximately 6-7 percent of federally chartered credit unions with combined assets of more than $141 billion face transition risks based on having fields of membership that fall into these categories. Credit unions associated with manufacturing and utilities accounted for $130 billion in assets and petroleum refining represented $11.5 billion in assets, according to the report. The report did not look at transition risks for state-chartered credit unions.

As part of the study, the Filene Research Institute – a think tank for the credit union industry – interviewed 20 U.S.-based organizations in late 2021, including federal and state-chartered credit unions, trade associations, industry experts and advisors. These interviews found that credit unions are in the early stages of thinking about climate change, the report said, with most respondents saying they had not yet integrated climate change into near-term strategic plans.

“[M]ost interviewees indicated an almost reactive stance toward climate change, such as ‘slow walking’ environmental sustainability until the system aligned around a shared approach or clear guidance was obtained from regulators on how to measure this risk factor,” the report said. “This captured the essence of the primary roadblock faced by credit unions: the lack of urgency, due in many cases to lack of awareness.”