How Australian Mutuals are pioneering climate action

Financial services risk professionals face a stark reality: climate change is a formidable disruption to business as usual. In November 2023, the Insurance Council of Australia noted, “For insurers to continue to provide insurance coverage at affordable pricing, action is required to strengthen the resilience of our homes, businesses, and communities, shift our approach to what we build and where we build it and see Australia’s economy transition to net zero”.

Yet, amidst growing uncertainty, a beacon of hope emerges—Australian mutuals, whose decades-long commitment to sustainability offers a blueprint for building resilient and responsible enterprises. 

Early awareness and pioneering action:

An example of mutuals’ attentiveness to their legal responsibilities regarding the environment appeared in 1994 when industry peak body Cuscal examined the work of Crisis Alert and Management (CAL&M), which was “a consortium of experts formed to help businesses through business crisis”. Cuscal noted that lending institutions may be found liable for environmental offences committed by mortgage holders after recent legislation and legal precedent.

By the 2000s climate change was near the top of the risk management agenda for mutuals and an Environmental Roundtable event organised by peak body Abacus Australian Mutuals (now COBA) in 2008 showed the urgency with which the industry was taking the issue.

Abacus’ Connexus magazine reported that “Roundtable participants were faced with the sobering reality that Australia is leading the charge of environmental destruction, emitting the highest percentage of environmental destruction per person in the world.

“It was unanimously decided by the attendees at the Roundtable that immediate action needed to be taken within their respective credit unions … Solutions that Roundtable participants discussed included: ethical wealth management; engaging in carbon reduction programs; reducing waste consumption and setting emission targets for each credit union; and educating members and community on climate change”.

Over ten years on from that roundtable event and how are we looking? Not so good, with the Intergovernmental Panel on Climate Change (IPCC) recently making another dire prediction about human induced climate change and chastising the global community for its lack of concerted action.

From pledges to progress: delivering on Sustainability commitments

Australian mutuals, however, have made good on the commitments made in 2008. An example of which can be seen in the number that have taken up B Corp certification. At the time of writing Teachers Mutual Bank, Australian Mutual Bank, Bank Australia, Beyond Bank and Summerland Bank are all B Corp organisations. According to COBA, “Certified B Corporations are organisations that meet the highest standards of verified social and environmental performance, public transparency and legal accountability to balance profit and purpose”.

Many other mutuals are playing their part. This can be seen in Qudos Bank’s partnership with Greenfleet, RACQ’s Green Home Loan (pioneered in the 2000s by Queensland’s own MCU), Gateway Bank’s and The Mutual’s plant-based debit cards, Bank First’s support of the Urban Bees initiative in Melbourne among other examples.

COBA noted last year that “there is also now an opportunity to lead in the fight against climate change, by encouraging other organisations along their supply chains to reduce their emissions”. Time will tell if the community at large takes the responsible course of action.

Leading the charge, inspiring action beyond borders

COBA noted last year that “there is also now an opportunity to lead in the fight against climate change, by encouraging other organisations along their supply chains to reduce their emissions”. Time will tell if the community at large takes the responsible course of action.

Building Responsible Enterprises: Moving from climate risk to resilience

The Australian mutuals' unwavering commitment to sustainability offers a valuable model for financial services risk professionals worldwide. By integrating sustainability into core strategies, embracing transparency, and collaborating with purpose-driven organizations, financial institutions can forge a path toward resilience in the face of climate risks, contributing to a more sustainable future for all.

The time for action is now. Financial services risk professionals are called to join the movement towards responsible and resilient enterprises, inspired by the trailblazing efforts of Australian mutuals in the fight against climate change.