About the Equator Principles

Large infrastructure and industrial Projects can have adverse impacts on people and on the environment. The Equator Principles (EPs) are intended to serve as a common baseline and risk management framework for financial institutions to identify, assess and manage environmental and social risks when financing Projects.

The Equator Principles apply globally, to all industry sectors and to five financial products:

1) Project Finance Advisory Services,

2) Project Finance,

3) Project-Related Corporate Loans,

4) Bridge Loans, and

5) Project-Related Refinance, and Project-Related Acquisition Finance.

See the section below on ‘Scope of the Equator Principles’ for information on detailed thresholds and criteria for application.

Equator Principles Financial Institutions (EPFIs) implement the 10 Equator Principles through their internal environmental and social risk management policies, procedures and standards in order to align with the Equator Principles. EPFIs may (at their own discretion) choose to utilise the Equator Principles for additional financial products outside the scope of the Equator Principles.

The Equator Principles are the most relevant and widely used risk management framework used by the financial industry when considering environmental and social risks in projects. When becoming Equator Principles Financial Institutions (EPFIs), financial institutions ensure that the projects they choose to finance are developed in a socially responsible manner and reflect sound environmental management practices. Through this application, negative impacts on project-affected ecosystems, workers and communities are avoided where possible; and if unavoidable, negative impacts should be reduced, mitigated and/or compensated for appropriately.

Robust application of the Equator Principles involves borrowers and users of finance to demonstrate good international industry practice in their identification, assessment and subsequent management of environmental and social impacts and risks.

Applying the Equator Principles offers significant benefits to EPFIs:

Improved E&S risk management
Utilizing the Equator Principles, EPFIs can better manage and disclose real-world environmental and social (E&S) risks, leading to more informed loan decisions, reduced negative impacts, reduced credit risk and better financial performance.

Enhancement of reputation
Demonstrating their commitment to E&S responsibility through their adoption of the Equator Principles, EPFIs build trust and credibility among their staff, recruitment processes and across internal and external stakeholders.

Improved relationships with stakeholders
Application of the Equator Principles can help build positive relationships with relevant stakeholders, leading to more effective project implementation, reduced risk of project delays or disruptions and improved social license to operate.

Adoption of best practices and E&S legacy
The collaboration between EPFIs and their stakeholders on broader issues including other international standards and guidelines helps knowledge transfer and learning. Good practice E&S activities can be a positive legacy long after individual transactions are financially complete.

EPFIs undertake an Independent Review, which checks that the requirements placed on the EPFIs under each of the 10 Equator Principle are being fulfilled through their management procedures, roles and responsibilities. This review process, which is based on a sample set of transactions, improves consistency and assurance of implementation of the EP by EPFIs and directly benefits individual EPFIs through identification of areas of improvement.

The Independent Review forms part of the process for a Probationary Signatory to pass the probationary period and transition to becoming a Full Signatory. Full Signatories must undertake an Independent Review, at least, once every three years and include a summary of this review as part of their EP Implementation Report for that year’s annual reporting.

The Equator Principles make a distinction between Designated and Non-Designated Countries in the application of the Equator Principles.

Designated Countries are those countries deemed to have robust environmental and social governance, legislation systems and institutional capacity designed to protect their people and the natural environment. Equator Principles Financial Institutions (EPFIs) make no independent assessment of each country’s performance in these areas. As a proxy for such an assessment, the EPFIs require that a country must be both a member of the Organisation for Economic Co-operation and Development (OECD) and appear on the World Bank High Income Country list to qualify as a Designated Country. These data sets are reviewed quarterly by the Office of the Equator Principles to ensure that any change in status is reflected in the Designated Countries list.

The following countries are Designated Countries (as at 1 March 2025):

The EPFIs, Equator Principles Steering Committee and the Office of the Equator Principles are committed to fully complying with antitrust / competition laws of relevant jurisdictions, including through adoption of an internal antitrust / compliance policy.

The Equator Principles are sector-agnostic, capable of global application, grounded in relevant international standards and laws where applicable, and are intended to provide a framework approach to Environmental & Social risk management to support each EPFI in its individual, independent assessment of Projects.

EPFIs use a collaborative approach (between each EPFI and its clients) to compliance with the Equator Principles and each EPFI should consider that any Project or Client can comply with the requirements of the Equator Principles with sufficient willingness and time to do so.

Each EPFI should apply the Equator Principles in accordance with all relevant legal obligations, including all applicable antitrust / competition laws, and ensure that:

1. each individual EPFI continues to determine its conduct independently of other EPFIs (including as regards commercial conduct on the market, selection of terms and conditions, application of the Equator Principles to any in-scope financial product, and integration of the Equator Principles into internal policies and procedures),
2. no engagement between EPFIs as regards the Equator Principles should require disclosure or discussion of competitively sensitive information, and
3. no collective boycott of any Client, Sector or Project is proposed or contemplated.

2023 marked the passing of 20 years for the Equator Principles in the financial marketplace.

Over these years the Equator Principles have evolved through four iterations – EP (2003), EP2 (2006), EP3 (2013) and EP4 (2020). Each revision involved extensive consultation followed by a vote by the member institutions. Through the process of periodic review and update, the scope of the Equator Principles applicability has broadened and the environmental and social considerations have been refined and expanded. Details of the changes introduced over the years are described in the graphic below.