Equator Principles III is coming – new trends and a strategy rethink

10 May 2013 - Lexology, Michael Torrance

The Equator Principles (EP) is an agreement amongst 76 global financial institutions to apply environmental and social standards to certain investment decisions. The third iteration of the EP is set to be released in 2013 (EP III). A draft of EP III was released in August 2012 suggesting what the final contents may look like. The release of EP III follows a major revision of the IFC Performance Standards on Environmental & Social Sustainability in 2012 (IFC Performance Standards), a set of guidelines that is incorporated by reference into the EP framework. Together, these changes mark an important evolution in best practice in environmental and social risk management of particular importance for both bankers and those seeking access to capital. Read More

Otkritie Bank becomes the first bank in Russia to adopt the Equator Principles

Moscow, 15 April 2013

On April 15, 2013 Otkritie Bank (OJSC) became the first Russian bank to join the Equator Principles Association. By adopting the Principles, Otkritie Bank has declared its commitment to sustainable finance and its readiness to take into account social and environmental considerations in major project financing.

The Equator Principles are a credit risk management framework for identifying, assessing, and managing environmental and social risk in project finance. The principles are adopted voluntarily by financial institutions and are applied where total project capital costs exceed US$10 million. The Principles are based on the International Finance Corporation’s (IFC) Performance Standards on Environmental and Social Sustainability, and on the World Bank Group’s Environmental, Health and Safety Guidelines.

At present, 78 banks, including ABN Amro, BNP Paribas, Barclays, Bank of America, Citigroup, Credit Suisse, HSBC, Societe General, and Unicredit have adopted the Equator Principles.

According to the Chairman of the Board of Otkritie Bank, Alexey Gonus, collaboration between the Bank and corporate clients in this area has a positive impact on the reputation of all concerned. "Worldwide, there is increasing attention on businesses’ social responsibility. This being the case, our acceptance of the Equator Principles will, first and foremost, help to show that the words "social responsibility" and "sustainable future" have real meaning for us and our customers."

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Shifting the equator

Canada - 25 February 2013 – ListedMag, Sandra Odendahl

Most banks assess the social and environmental impact of major resource-based projects they finance using the Equator Principles. And those principles might soon look very, very different.  If you work in mining, oil and gas, power generation or any other intensive resource-based industry, you are probably familiar with the Equator Principles—a framework used by major banks to assess the social and environmental impact of financed projects. What you may not know is that in 2013, the Equator Principles are slated to look very, very different—more prescriptive and wide-ranging—with changes that will affect availability, access, terms and reporting requirements for project financing all over the world.  Read More.

Revising the Equator Principles: Why Banks should not become the New Sustainability Regulators of Emerging Markets

29 January 2013 - World Growth

On 13 August 2012 a draft of the updated Equator Principles (EP) was released for stakeholder consultation and public comment. This latest revision of the EP is a marked attempt to dramatically alter the role of financial institutions in emerging markets, from financiers to sustainability regulators.  By writing certain levels of environmental and social performance into Project Finance documentation, which go beyond the levels prescribed by national law, EP lenders (EPFIs) become obligated to monitor, verify and remedy borrower compliance with sustainability standards. Read More.

Cross-Sector Biodiversity Initiative Launched

6 February 2013

ICMM, IPIECA (the global oil and gas industry association for environmental and social issues) and the Equator Principles Association have launched a cross-sector biodiversity initiative (CSBI) in Washington, D.C.

The initiative has been created to develop and share good practices and practical tools to apply the new International Finance Corporation's (IFC) performance standard 6 on biodiversity conservation. IFC's performance standards have become globally recognized as a benchmark for environmental and social risk management in the private sector.

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BCP first Peruvian bank to adopt Equator Principles

Lima, 22 January 2013

As part of its corporate commitment to sustainability and environmental protection, Banco de Crédito - BCP, the leading Peruvian financial institution, announces its adoption of the Equator Principles (EP). The EP are a set of principles based on the International Finance Corporation (IFC) Performance Standards that are adopted voluntarily by financial institutions in order to help them identify, assess, and manage environmental and social risks and impacts in project finance. The EP are applied to project finance transactions where total project capital costs exceed US$10 million.

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DZ Bank AG adopts the Equator Principles

Frankfurt, 01 January 2013

On 1 January 2013 DZ BANK AG recognised the Equator Principles, which provide a global standard for project finance, thus documenting that it is prepared to develop its core business in a sustainable manner. Having signed up to the Equator Principles, DZ BANK AG will in the future apply these guidelines world-wide to all new project finance transactions with a volume in excess of USD 10 million. “By deciding to sign up to the Equator Principles we clearly demonstrate to our customers and to society as a whole just what strict social and ecological criteria we comply with when financing projects. We do this for reasons of risk provisioning as well as out of responsibility for society,” said Wolfgang Kirsch, Chief Executive Officer of DZ BANK.

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Increasing scrutiny of environmental and human rights impacts of large scale infrastructure projects

17 December 2012 –  Charles Russell, Malcolm Dowden

Large scale infrastructure projects in the UK and around the world are under increasingly close scrutiny from campaigning NGOs and ethical investment indices concerned with their environmental and human rights impacts. Those increased levels of scrutiny and activism are finding legal expression, including court proceedings just launched by Friends of the Earth in the Netherlands in respect of Shell's activities in Nigeria, and the 2006 International Court of Justice ruling in respect of the Fray Bentos pulp mill in Uruguay.  NGOs are also pressing for more rigorous and meaningful enforcement of the environmental and human rights elements of the 'Equator Principles' (EPs), which are currently being updated and extended. In particular, NGOs are seeking to highlight the limited effectiveness and inadequate implementation of grievance mechanisms – intended to hear, address and resolve community complaints without requiring expensive recourse to formal judicial proceedings. Read More.

Ecosystem Services: Flying or Crawling in 2013?

13 December 2012 - Environmental Leader

The next phase of ecosystem services will affect companies’ decision making and public policy — but how that plays out remains to be seen, according to a BSR blog. Last January, companies seeking financing from the World Bank and other Equator Principles signatories became subject to due diligence processes that examine corporate impacts and dependencies on ecosystem services — the benefits provided by functioning ecosystems. Read More.

How will ecosystem services affect corporate decision-making?

12 December 2012 - Green Biz, Sissel Waage

In January 2012, a potentially significant shift occurred for corporate decision-makers: Companies seeking financing from the World Bank’s International Finance Corporation, as well as from 76 global banks that signed on to the Equator Principles, became subject to due diligence processes that examine corporate impacts and dependencies on ecosystem services. This occurred even as more than 16 national and regional governments continued to focus on ways to integrate ecosystem services into public policy. With small-scale exploratory work underway for several years, corporate applications covered the spectrum - from integration of ecosystem services into accounting to consideration of the issues as an element in risk-management and impact-assessment protocols. Read More.