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.

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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.

The Equator Principles: Banking on Sustainability

23 August 2013 – Capital Finance International

Financial institutions worldwide are increasingly benchmarking their larger investment projects to the Equator Principles of social and environmental risk assessment. A third and more comprehensive edition of these guiding principles has now been drawn up and is being used by 79 financial institutions in 35 countries to gauge the impact of investments. Read More.

5 things energy companies should know about the Equator Principles

21 August 2013 – GreenBiz, Chris Nolan and John Hodges

Since the inception of the Equator Principles in 2003, the energy and extractives industry has been a major focus of the environmental and social risk reviews conducted by nearly 80 member banks. For example, Bank of Tokyo-Mitsubishi, a leader in project finance, put 225 projects through its Equator Principles review process between 2006 and 2012. Of these, 60 percent were in the mining, oil, gas and energy sectors. Read More.

Time to close accountability gaps in infrastructure project funding

21 August 2013 - CSR Asia Weekly, Leena Wokeck

From January 2014 financial institutions that have adopted the Equator Principles, a risk management framework for determining, assessing and managing social and environmental risks in project finance, will have to implement a new iteration of the framework. Even though action would be much needed and the revisions are relevant in Asia, the impact is sadly likely to be limited.  Of the 78 financial institutions that have committed to the Equator Principles, only five are from Asia, one each from China and India and three from Japan (Industrial Bank Co. Ltd, IDFC Limited, Bank of Tokyo-Mitsubishi UFJ, Mizuho Bank Ltd. and Sumitomo Mitsui Banking Corporation. Read More.

Voluntary bank lending principles now include consideration of climate change

19 August 2013 - Jones Day, Charles Hungerford

Effective June 4, the members of the Equator Principles Association voted to amend and strengthen the Equator Principles to include consideration of the effects of major projects on climate. The Equator Principles are voluntary standards designed to guide banks in their evaluation and management of the environmental and social risks presented by loans used to finance large projects. The Equator Principles are based on Performance Standards developed by the International Finance Corporation ("IFC"), part of the World Bank Group. The Principles provide that member banks will give loans only to covered projects that meet its 10 principles. Read More.

Banking on human rights protection for major infrastructure projects

16 August 2013 - The Guardian Blog - Jennifer Kho

The launch of the third version of the Equator Principles calls on banks to consider human rights risks, Citi's Shawn Miller tells Jennifer Kho what this means for project developers. Banks that finance infrastructure projects such as power stations, pipelines, dams and mines, have to account for a number of risks when assessing loans but human rights has been noticeably absent. Read More.

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.