Insights from the RBK Annual Credit Union Seminar, May 2025

At the RBK Annual Credit Union Seminar held last month, we heard from Gareth Fitzpatrick around the growing importance of Environmental, Social, and Governance (ESG) considerations in the credit union sector.

Developing a robust ESG policy and strategy is no longer optional but essential for ensuring long-term sustainability, regulatory compliance, and community trust. The RBK survey highlighted that 1 in 5 credit unions still have not developed their ESG framework, indicating that there is further work to be done.

1. Regulatory Compliance and Risk Management

The Central Bank of Ireland has increasingly focused on ESG factors, integrating them into regulatory frameworks and supervisory expectations. The Credit Union Amendment Act has updated the list of mandatory policies to include one on ESG. Therefore, it is expected that governance, strategy and risk management would all evolve to give due consideration to ESG.

2. Corporate Sustainability Reporting Directive (CSRD)

In February 2025, the EU unveiled its Omnibus proposals in respect of CSRD. These proposals aim to reduce the burden of CSRD compliance. Currently, it is not clear whether Credit Unions will be in scope of the CSRD but the new proposed voluntary disclosure standards will mean a certain level of expectation for organisations to provide information about their sustainability agendas. The development of ESG strategies will prepare credit unions to meet the requirements of these voluntary disclosure standards.

3. Operational Resilience

Our survey results this year highlighted that 80% of credit unions have considered the impact of climate related events on their credit unions’ Business Continuity Plans. This would suggest that having a clear ESG strategy and policy will help support operational resilience maturity and bolster resilience against environmental and social disruptions.

4. Meeting Member Expectations

Many financial institutions, including credit unions, are offering sustainable credit to their members. By creating access to sustainable finance, credit unions can support their communities and members by helping with the transition to a lower carbon economy. Simultaneously, credit unions invest surplus member funds to generate a return. By investing in green products, credit unions can help stimulate demand for investment products which are more sustainable such as those that don’t support fossil fuels, tobacco and alcohol. These can help attract a newer cohort of members who prioritise sustainability and want to feel aligned with organisations that hold similar beliefs to themselves.

5. Governance and Long-Term Financial Performance

Clear ESG strategies which are supported by clear policies and procedures will allow Boards of Credit Unions to improve overall governance and enhance viability. Integrating ESG factors into decision-making processes can lead to a number of benefits including diversity and inclusion, improving income generation, mitigate against transition risks while capitalising on opportunities.

Conclusion

Developing an ESG policy and strategy is a strategic imperative for credit unions aiming to navigate the evolving financial landscape. It ensures compliance with regulatory expectations, enhances operational resilience, meets member demands, opens avenues for sustainable finance, and supports long-term financial health.

Credit unions are encouraged to initiate or strengthen their ESG efforts, aligning with best practices and sector-wide initiatives to foster a sustainable and resilient future.

How can RBK help?

If you want to find out more information on ESG Policy and Strategy, please contact Michelle or Gareth:

• Michelle O'Donoghue: Governance, Risk & Assurance Partner, (090) 648 0600
• Gareth Fitzpatrick: Governance, Risk & Assurance Manager, (090) 648 0600