UPDATED - Guidance for EPFIs on Incorporating Environmental and Social Considerations into Loan Documentation

12 March 2014

Following the launch of the Equator Principles (EP) III in June 2013 and end of the EP III transition period, the EP Association has updated its guidance document for Equator Principles Financial Institutions (EPFIs) on incorporating environmental and social considerations in to loan documentation.

The Guidance for EPFIs on Incorporating Environmental and Social Considerations into Loan Documentation, originally published in 2009, has been revised to reflect the new language and extended scope of EP III, and now includes specific clauses on Independent Environmental and Social Consultant Reviews and reporting requirements for borrowers.

Note the guidance document is for use by EPFIs to assist them in incorporating environmental and social considerations into loan documentation (as appropriate) and is not a required legal framework.

Further resources can be found on the Best Practice and Resources page.

NEW - Guidance for Consultants on the Contents of a Report for an Independent Environmental & Social Due Diligence Review

12 March 2014

The Equator Principles (EP) Association is pleased to share the new guidance note, “Guidance for Consultants on the Contents of a Report for an Independent Environmental & Social Due Diligence Review”  for use by consultants to support their engagement with EPFIs when undertaking an Independent Environmental and Social Due Diligence Review (as described in Principle 7 of the EP).

This guidance document  can also be used by EPFIs to assess whether an Independent Review delivered by a Consultant is appropriate. It should be noted that EPFIs may have additional requirements for an Independent Review which are specific to a particular Project and are not covered in this guidance document

Further resources can be found on the Best Practice and Resources page.

Impact investing grows as asset managers recognise value

12 February 2014 - Guardian Sustainable Business, Justina Alders-Sheya

Stakeholders increasingly expect to see evidence that their money is being invested responsibly - impact investing can provide that assurance. The Equator Principles are often used as a reporting standard to ensure investments are adding real value. With a growing focus on the environment, our social footprint and the principles of ethical corporate governance, the investment process, across all of these asset classes, is evolving. The term 'impact investing' is increasingly being used to describe when asset managers proactively integrate one or more of these three elements into their investment strategy. It represents a move towards a new way of investing, with social conscience at the forefront of every deal. Read More.

The Equator Principles: Ten Teenage Years of Implementation and a Search for Outcome

30 January 2014 - CIGI Series, Olaf Weber and Emmanuel Acheta

This paper correlates these 10 years of existence to the adolescent stage of the EPs, still seeking to establish relevance. Environmental and social assessment of projects is increasing in global adoption and scope and the EPs strive to redefine these assessment practices. Critics reason, however, that without implementation efforts and enforcement, the EPs are merely window dressing and will not contribute to any change to sustainable development. The authors point out gaps in how EPFIs address the implementation of guidelines in project finance decision making, how projects implement environmental and social assessment processes in practice and whether the implementation will have a positive effect on project sustainability. The paper concludes that these gaps need further research and analysis to better understand the role of the EPs in sustainable development. Read More.

Launch of the Cross Sector Biodiversity Initiative Timeline Tool

27 January 2014

The Cross Sector Biodiversity Initiative (CSBI) has launched a Timeline Tool designed to assist project planning in the extractives industries to better align project development, biodiversity impact management, and financial timelines and milestones.

The tool:

  • Provides a road-map that helps to identify critical milestones and inter-dependencies between project development and financing timelines
  • Identifies actions required to apply the mitigation hierarchy to effectively address potential impacts as early as possible in the project life-cycle
  • Raises awareness and highlights sensitivities and operational challenges associated with biodiversity impact mitigation
  • Can be used as an internal capacity building resource or communications tool as it supports the work of a variety of functions in project planning and execution.

Download

CSBI Timeline Tool

About the CSBI

The Cross Sector Biodiversity Initiative (CSBI) is a partnership between IPIECA, the International Council on Mining and Metals (ICMM), and the Equator Principles Association. The initiative aims to develop and share good practices for the effective application of the new International Finance Corporation (IFC) Performance Standard 6 on Biodiversity Conservation and the Sustainable Management of Living Natural Resources.  The aim of the CSBI is to bring together industry in order to share experiences as part of a culture of learning and continuous improvement.

New Year, New Principles - Transition Period Ends and EP III Mandatory for New Transactions as of 1 January 2014

1 January 2014

The transition period for the Equator Principles (EP) dated June 2013 ended on 31 December 2013 and the third version of the EP ('EP III') is mandatory for all new transactions (where the mandate is signed after 31 December 2013) from 1 January 2014. EP III does not apply retroactively therefore EP Association Members are not expected to switch from EP II to EP III for transactions where the mandate was signed before 1 January 2014.

Note that the EP Association Steering Committee accepts that in certain situations there might be legal constraints that prevent EP Association Members applying EP III from 1 January 2014, however each member should make all necessary efforts to ensure EP III is incorporated into their institution's review of transactions according to their own risk management frameworks and engagement with clients from this date.

If you have any questions about EP III and the change from EP II to EP III, please contact the EP Secretariat via JLIB_HTML_CLOAKING

Sustainable Finance South Africa December 2013

12 December 2013 - Sustainable Finance South Africa December 2013, WWF South Africa Newsletter

A key skills set of banking is defining, pricing and managing credit risk. A company's credit risk can be affected by many factors such as market dynamics of the industry in which the company operates, environmental impacts such as water quality, and the reliability and robustness of the technology used by a company. All these sometimes interdependent factors make credit risk a complex, specialised area of expertise within a bank.

Biodiversity risk is an important area of non-financial risk that can impact credit. With this in mind, WWF-SA, in partnership with the Equator Principles Association, Forest Trends and Business and Biodiversity Offsets Programme, hosted a Banking for Biodiversity workshop in Johannesburg. Read More.

UK Green Investment Bank adopts the Equator Principles

London, 2 December 2013

The UK Green Investment Bank (GIB) has today announced that it has become a signatory to the ‘Equator Principles’: the global ethical investment framework. Founded in 2003, the Equator Principles provide a globally consistent governance model to assess and manage environmental and social risk in financing.

Read more...

The Equator Principles Association Hosts 2013 Annual Meeting And Equator Principles Workshop In Tokyo

5 & 6 November 2013

Nearly 75 individuals, representing 40 financial institutions, attended the 2013 Equator Principles (EP) Association Annual Meeting and Workshop on 5 and 6 November 2013 in Tokyo. It was the first time that members had gathered outside of Washington DC and was a unique opportunity for the EP Association to engage financial institutions in Asia, and underlined its commitment to discussing environmental and social risk management in a regional context.

Following the success of the 2012 Workshop, Equator Principles Financial Institutions (EPFIs) met on the 6 November to discuss implementation of EP III (including triggers for Project-Related Corporate Loans, project categorisation, disclosure (ESIA and GHG reporting) and EPFI reporting requirements, and other pertinent environmental and social matters) and how best to support members during the transition period and in the consistent application of EP III.

Are big banks short-selling their leverage over human rights?

31 October 2013 - The Guardian Sustainable Business, Ariel Meyerstein

Earlier this month, a handful of major European banks calling themselves the Thun Group released a "discussion paper" on how financial institutions should implement the UN Guiding Principles on Business and Human Rights. The paper is a sign that some industries are moving past fluffy CSR mantras and putting rubber to the road, for the UN principles. That's important because the guiding principles aren't legally binding – although they have catalyzed some new policies and may inform future regulation. The principles still need to be translated into more specific guidelines for different sectors before they can ultimately be useful to the global marketplace. ... In addition, most of the members of the Thun Group – which include Barclays, BBVA, Credit Suisse AG, ING Bank N.V., RBS Group, UBS AG and UniCredit – also are members of the Equator Principles Association's steering committee, so their pronouncements should be taken seriously. Read More.