EP III: an open pit for finance?

12 August 2013 - White and Case LLP - John Tivey, Rebecca Campbell , Mark Castillo-Bernaus and Tallat Hussain

The Equator Principles (EP) is a risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk. EP applies globally to all industry sectors and covers project finance and various forms of lending. Currently, 79 financial institutions in 35 countries have adopted EP, covering more than 70% of international project finance debt in emerging markets. Financial institutions that follow EPs will not provide project finance or project-related loans where the client will not, or is unable to, comply with EP. The lenders’ mantra was: “We will not provide loans to projects where the borrower will not or is unable to comply with our respective social and environmental policies and procedures that implement the Equator Principles.” Recognising the unavoidable impact on the environment and communities from extractive industries is both complex and challenging. The latest round of revisions to EP – the third set, hence the abbreviation ‘EP III’ – have attempted to dig deeper into the relationship between financing and lender responsibility for the consequences. On the surface, the EP III appears to impose more onerous requirements on borrowers. Yet, they are designed to reconcile the role of lenders with the global consequences of their lending. But are lenders ready to be charged with the responsibility of being custodians of our global commons when the mechanism of financing mining projects, and the banking industry itself, are being re-invented?. Read More.

How to get your arms wrapped around the Equator Principles

19 July 2013 - GreenBiz.com - John Hodges

While many industries grapple with which sustainability standards to follow, the banking industry has a clear framework for infrastructure finance: the Equator Principles. With the launch of the third version of the Equator Principles, or EP III, last month in Amsterdam, the scope and scale of how banks manage environmental and social risks in their financing activities significantly has increased. The Equator Principles provide a framework for determining, assessing and managing such risks in projects that banks might finance. Read More.

Equator Principles III - New Guidelines for Project Finance

9 July 2013 - Dentons, Mark Cheney and Sarah-Jane Hogg

Ten years after their launch, a third version of the Equator Principles, the Equator Principles III (EP III), was adopted by the Equator Principles Association on 14 May 2013. EP III is more robust than its predecessors and of wider scope, creating new compliance challenges for lenders that have signed up to the Equator Principles, and for borrowers seeking financing for projects within the ambit of EP III. Mark Cheney and Sarah-Jane Hogg explain the key changes. Read More.

New Analysis: The Equator Principles in the OECD

17 June 2013 - Project Finance

Permitting and public participation requirements in the 31 countries that the World Bank classifies as high-income Organization for Economic Cooperation and Development (OECD) generally meet or exceed the initial assessment and review requirements of the Equator Principles (EP).  Therefore, when financing a project located in one of these countries, which include the United States and Canada, obtaining a compliance opinion is usually fairly straightforward.  This process, which takes place at the pre-construction stage, is often based on the results of environmental studies, project design specifications, successful completion of the required permitting process, and is contingent upon financing documents including covenants related to monitoring, reporting and compliance ... Read More.

The Equator Principles: How Will The Revisions Impact You?

12 June 2013 - Mondaq - Milbank, Tweed, Hadley & McCloy LLP, Matthew H. Ahrens and Paul Murphy

The third revision (EP III) of the Equator Principles (EPs) will be launched on June 4, 2013, and it will affect applicable transactions signed on or after January 1, 2014. The EPs will continue to function in a substantially similar manner, but the EP III has, among other things, made the EPs applicable to a wider slate of transactions, expanded the scope of underlying review, and imposed additional disclosure and reporting obligations. Although there is time to internalize the revisions during the transition period, failure to comply with the EP III on a going-forward basis could put financial institutions in non-compliant scenarios, if proper arrangements are not made in advance of the effectiveness of these lending guidelines, as revised. This Client Alert provides some guidance about changes due to the EP III to help financial institutions assess related risks for future transactions. Read More.

The New Equator Principles III Amplify CSR For Financial Institutions

12 June 2013 - CSR Newswire - Ariel Meyerstein, Esq., PhD

Last week, the Equator Principles (“EPs”), a private code of conduct adopted by 80 financial institutions globally, released a revised version – EP III that significantly upgrades the banks’ commitments to corporate social responsibility, including human rights, climate change and transparency.  It also broadens their scope of application beyond the narrow confines of project finance structured loans to “project related” corporate loans of US $100 million or more (when certain conditions are satisfied). Significantly, the new EP III may be the first corporate code to recognize the “responsibility to respect human rights by undertaking due diligence” in accordance with the UN Guiding Principles on Business and Human Rights. Read More.

Third Generation of Equator Principles (EP III) is out - What's New?

7 June 2013 - Prizma, Mehrdad Nazari

The Third Generation Equator Principles (or EP III) emerged as a result of a self-imposed Strategic Review. This was initiated in 2010. The outcome of this review includes the adoption of a new governance structure: the Equator Principles Association. A summary of the Strategic Review was published in mid-2011. However, it took over two more years to develop, consult, approve and launch the EP III. Read More.

Natural resource shortages, new Equator Principles and carbon pricing in Australia

5 June 2013 - Ethical Corporation, Stephen Gardner

The Equator Principles, a code used by financial institutions when assessing the environmental and social impacts of large-scale project finance deals, has been formally updated. The new EP III guidelines extend the principles to more types of project finance, strengthen provisions on climate change and human rights, and impose greater public disclosure requirements. Read More.

Equator Principles III comes into effect

5 June 2013 - King & Wood Mallesons, Mark Beaufoy and Jeff Clark

A new version of the Equator Principles came into effect yesterday. The new Equator Principles have been extended in scope and impose new requirements on financial institutions and export credit agencies. For the first time, they include express requirements regarding human rights. Read More.

New Equator Principles to have deeply underwhelming impact on people and planet

4 June 2013 - BankTrack

The long awaited new, third version of the Equator Principles (EP III) (1) will have a deeply underwhelming impact on safeguarding the rights and interests of communities affected by ‘Equator compliant‘ projects, as well as on efforts to stop runaway climate change. Thus concludes BankTrack, the global network of NGOs closely monitoring the Principles since their inception in 2003, at the formal launch of EP III, today in Amsterdam at the 10th Anniversary Conference of the Equator Principles. Read More.