•  A group of Australian customer-owned banks have come together for the sector’s first collective climate scenario analysis to understand how climate change could reshape their business and their customers’ lives, and how to build long-term resilience against these risks. 
•  Fluctuations in household income and employment – influenced by climate shifts, insurance costs, and the economic transition – presented potential risks within certain climate-related projections.

• Deeply rooted in the communities they serve and with a long record of standing by members through hardship, customer-owned banks are uniquely placed to help their customers prepare for and weather these impacts, while the analysis also supports new mandatory reporting under AASB S2

In an industry first, a group of Australian customer-owned banks have come together for a climate scenario analysis, with potential climate-related impacts on household income and employment stability emerging as key areas of focus. The collective analysis explored how customer-owned banks can best support their communities through this changing landscape, while simultaneously safeguarding their portfolios against potential credit and financial risks.

The report, Shared climate scenarios for the mutual banking sector, was prepared by actuarial and analytics firm Finity and Climate KIC Australia, part of the University of Technology Sydney’s Institute for Sustainable Futures. It was developed through workshops with a group of customer-owned banks from across Australia. The report offers a shared, forward-looking view of how climate change could reshape the sector.

Rather than building their own climate scenarios from scratch, the project brought participating banks together to develop two shared, plausible and challenging versions of the future to identify risks and opportunities and to assess their resilience. While the report is grounded in this collaboration, it does not represent the views of all participants, nor the sector as a whole. 

Stephanie Elliott, Chief Impact Officer of Customer Owned Banking Association (COBA), said, “Customer-owned banks are closely connected to the communities they serve and are already seeing how climate pressures can affect household finances. Mutual banks and credit unions have long supported members through challenging times, and this collaboration is another step in strengthening that capability. It provides a shared starting point to help participating institutions better understand these risks and respond in practical ways.”

The work develops an evidence base for climate resilience in the customer–owned banking sector and will support banks to meet the requirements of AASB S2, Australia’s new mandatory climate reporting standard. AASB S2 requires entities to explain how climate risks and opportunities could affect their business and to assess how resilient their strategy is under different climate futures. Developing these scenarios together is intended to ease that burden and build capacity across the sector, while lifting the quality and consistency of climate reporting.

Sharanjit Paddam, Principal at Finity, said, “Climate change is already reshaping the risks facing Australian households, and customer-owned banks feel that through impacts on their customers and communities. What stands out is that the exposure to climate risk is not abstract or far off. It is insurance becoming unaffordable in the places people already live, and the pressures of higher disaster costs on households, as well as the potential impact on communities that are highly exposed to industries that may decline under a transition to net zero. The value of this work is that it helps the sector get on the front foot, understand these risks early and take proactive steps to support customers, rather than waiting for the impacts to arrive.”

Chris Lee, CEO at Climate KIC Australia, said, “Climate impacts cut across communities, markets and institutions, so resilience can’t be built in isolation. The climate scenarios we’ve helped deliver will allow the mutual banking sector to better understand and respond to climate risks with greater alignment and coordination. We’re pleased to have supported these nine customer owned banks to develop a shared view of the challenges ahead, making it easier to meet disclosure requirements with confidence and build the internal capability needed to manage climate risk now and into the future.”

Disruptions to customer incomes and employment the standout risk

Across both low- and high-warming scenarios, the report suggests that climate-driven disruption to employment and incomes should be the key focus areas for mutual banks. Physical climate impacts, including severe weather events and long-term climate change, can disrupt local economies and supply chains, as well as lead to higher insurance costs. 

The report references Australia’s National Climate Risk Assessment (NCRA), which highlights how physical climate impacts can drive escalating economic costs across communities, damage facilities, disrupt operations, and lead to financial losses that can flow through to household budgets, especially in regional and rural areas. The NCRA also called out insurance affordability as a key risk straining Australians’ household budget.

The report also identifies clear opportunities and points to trust as the mutual banking sector’s greatest strength. Customer-owned banks have a long history of supporting members through disasters and their strong community relationships mean they are well positioned to support the resilience of local economies, as well as their ongoing financial resilience. As households invest in resilience and energy upgrades, these banks can continue to offer green and resilience lending and to draw on those close relationships to guide and support customers through the energy transition and increasing extreme weather events.

Aaron Newman, CEO at Queensland Country Bank, “As a member-owned bank, our focus has always been on the wellbeing and resilience of the communities we serve. Weather events such as the Townsville floods remind us of the importance of standing alongside our Members before, during and after natural disasters. Whether through practical financial assistance, helping Members recover from hardship, or supporting our people so they can assist their own families and communities, we’re committed to being there when it matters most. 

“At the same time, we’re helping build long-term resilience by empowering Members to make more sustainable choices through initiatives such as our award-winning Green Reno Loan and Green Car Loan. Climate scenario analysis is another important part of that commitment, helping us better understand a range of plausible future climate-related risks so we can make informed decisions that strengthen our resilience and continue supporting our Members and communities into the future.” 

A starting point, not the finish line

The shared scenarios are also designed to provide insights beyond this first round of climate reporting. As the climate, policy and market shift, banks can update and reuse them, making climate risk an ongoing part of how they plan rather than a box ticked once and filed away.

The full report is available here. 

About Finity

Finity is Australia’s largest actuarial and strategic analytics firm, working with large-scale organisations and government, through to tech start-ups across a range of industries, including insurance and banking. Finity is also the proud recipient of the Insurance Industry’s Professional Services Firm of the Year (2025) award.

Learn more: www.finity.com.au

About Customer Owned Banking Association

The Customer Owned Banking Association is the industry body for mutual banks, credit unions and building societies. For almost 180 years, the mutual sector has put customers and communities first, proudly serving the needs of the more than 5.4 million Australians who place their trust in customer-owned banks.

About Climate KIC Australia

Climate KIC Australia, based at the University of Technology’s Institute for Sustainable Futures, brings people together to catalyse systems change. We combine research and systems innovation practice to design initiatives that turn climate ambition into impact. As part of the global Climate KIC network, we partner widely to help communities, organisations and institutions navigate complexity and drive the transitions needed for a net zero, resilient, healthy and thriving future for all.

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