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.
SYDNEY, 6 August 2026 — 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 Climate KIC Australia, part of the University of Technology Sydney’s Institute for Sustainable Futures, and actuarial and analytics firm Finity. 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,” Stephanie said.
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 that 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,” Sharanjit said.
“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,” Chris said.
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.
About the analysis
Developed in collaboration with nine participating banks, together with wider inputs from Australian and international climate scenarios, the project developed two scenarios that were relevant to the residential mortgage business of participating banks.
The scenarios and the assessment of risks and opportunities do not represent the views of the entire sector nor of COBA. Each individual bank will need to tailor the scenarios to its own portfolio, geography and members. The report is a common, collaboratively developed and researched starting point, but not a substitute for the analysis every bank must complete.
Scenarios
The report considers two climate scenarios, designed to help identify risks and opportunities, and to explore the impacts on customers and the resilience of the sector. These scenarios were also designed to meet the requirements of AASB S2.
In the low-warming scenario, where the world limits warming to around 1.5 degrees:
- Strong global collaboration drives rapid emissions reductions and an accelerated energy transition.
- Transition becomes the defining challenge as policy, compliance, market shifts and changing customer expectations reshape the sector.
In the high-warming scenario, where warming approaches 2 degrees by 2050 and well exceeds that level by 2100:
- Limited mitigation leads to escalating physical climate impacts.
- Adaptation becomes the defining challenge as severe weather, coastal hazards and insurance stress intensify.