Q. My financial institution (FI) is interested in adoption the Equator Principles (EPs), what is the first step?
As a first step we encourage prospective adopters to thoroughly review the EP Association website to ensure that they understand the EPs and the Association itself.
- We strongly encourage any prospective adopters to read the most recent version of the Equator Principles and the EP Association Governance Rules in detail before deciding if they wish to proceed with a query.
- The Adoption Process page, which contains key details on the application process.
- The Documents & Resources page, which contains key EP documents including important information on EP implementation.
Contact the EP Secretariat at secretariat[@]equator-principles[.]com about application details and/or any adoption-related questions.
Some FIs may choose to consult with an existing EP financial institution (EPFI) in the same region for adoption information and experience.
Note that all adoption queries remain confidential until the adoption date.
Q.What are the factors considered by the EP Association when reviewing an application?
Adoption of the EPs is open to financial institutions who undertake transactions within the scope of the EPs i.e. the FI has a level of activity in Project Finance as per the EP definition. Evidence of this via league tables or project examples can be helpful.
FIs should adopt the Equator Principles through their group holding company or any other group entity which permits a broad and consistent commitment to the Principles across their relevant business functions and operating subsidiaries .i.e. no other member of the holding company undertakes project finance and/or the member sets their own policies.
Q. What are the adoption requirements for a prospective EPFI?
As set out in the EP Association Governance Rules, a prospective adopter must satisfy the following:
- It shall confirm in writing that it is Active in providing applicable financial products (according to the most recent version of the Equator Principles) and that it wishes to adopt the Principles and will implement the Principles with immediate effect from its Adoption Date.
- Any such confirmation shall be signed off at a senior level in the financial institution by a representative of the institution with authority to enter into such a commitment, such as an executive member of the board of directors or the company secretary, provided that such person has authority to bind the adopting institution.
- The prospective new EPFI shall complete and execute the Adoption Agreement, which requires the applicant to:
– provide contact names;
– make a contractual commitment to comply with these Rules;
– waive any right of action against other EPFIs with regard to their acts or omissions as members of this Association (save always in the case of fraud); and
– indemnify the Trustees who hold assets or any EPFI member of the Steering Committee who enters into authorised contracts with third parties on behalf of the Association (save always in the case of fraud) against any losses such Trustees or member may incur as a result thereof. This indemnity shall be jointly with the other members of the Association at the time of the losses.
- The applicant shall submit a duly executed Adoption Agreement and its letter of confirmation referred to in Rule 5fi and 5fii for consideration to the Secretariat.
Download the EP Adoption Agreement and Contacts forms.
Q. How long does the adoption process take?
The main factor is the readiness of the prospective adopter, however, timing can vary due to several factors, including for example, 1) whether the prospective adopter provides the required information and documentation in a timely manner; 2) whether additional information is required; and 3) the availability of key individuals within the EP Association to review the material.
If there is a particular date by which a prospective adopter wishes to adopt, then they will need to notify the EP Secretariat early in the process and also ensure that all of the required documentation, and supplementary material, is available. The EP Secretariat cannot guarantee that a specific timeframe can be met, especially if it is less than one month.
Q. Are we required to use a third party (e.g. a consultant or legal firm) to assist with the adoption process?
No. The adoption process is very straightforward and the Secretariat can assist with any queries that you may have. You might also wish to speak directly with an existing EPFI in your region.
However, many FIs do use third parties to assist with updating their environmental and social policies to ensure that they comply with the EPs, as required. The EP Secretariat cannot make recommendations as to any third parties.
Q. Does my institution need to have specific policies and procedures in place to adopt the Equator Principles?
Adoption of the Principles by a financial institution is voluntary but once such adoption has been made, the adopting entity must take all appropriate steps to implement and comply with the Principles. Each EPFI shall introduce and implement its own internal environmental and social risk management policies, procedures, and standards in order to comply with the Equator Principles.
There is a range of key documents and resources about EP implementation on the EP website.
Q. Who is in charge of confirming a financial institution adopting the EP?
The EP Steering Committee Chair approves any new membership. However, the initial paperwork submitted by the prospective adopter will be reviewed by the EP Secretariat, who may also ask for relevant supplementary information, such as league tables.
The Chair is only made aware of applications after the EP Secretariat has completed an initial review and assessment. Applications are confidential to the EP Secretariat until this time, although often the prospective adopter has already engaged in discussion with a locally based EPFI.
Once the paperwork is deemed to meet the necessary requirements, the application will be passed over to the EP Chair. If the Chair has any questions or concerns, the Chair may consult with the respective Regional Representative on the Steering Committee. In addition, the Chair of the EP Association Steering Committee may ask about the FI’s environmental and social policies and track record before making a decision.
Q. Is there a fee to belong to the EP Association?
All EPFIs are required to pay an Annual Fee to be a member of the EP Association. Any new member that joins part way through a year will be required to pay a pro rata amount for the number of months remaining in the year. There is no ‘joining fee’.
Q. What happens when an FI becomes a member?
On the day that the FI adopts the EPs, an announcement will be made on the news page of the EP Association website. The FI will also make an announcement on their own website.
The FI will also be added to the list of members.
Q. What does membership of the EP Association involve?
All members of the EP Association are required to comply with the EP Association Governance Rules and to meet the requirements set out in the current EPs. These requirements include:
- that it continues to be Active in Projects within the scope of the current version of the EPs
- that it meets reporting requirements
- that it pays the Annual Fee in a timely manner.
More generally, the EPA is a membership organisation governed by a Steering Committee of elected volunteers whose work is largely undertaken by a number of voluntary EPFI Working Groups. All EP Association members benefit from the work of the Steering Committee and the Working Groups, and as such, EPFIs are expected to play an active role in participating, and supporting the work of these. Tasks might include engaging in Working Group calls, contributing to and reviewing guidance documents, input into reviews by third party consultants undertaken on behalf of the EP Association.
Members of the EP Association have access to a wide collaborative network of peers to share knowledge and contribute towards best practice development. Members are strongly encouraged to participate in the Annual General Meeting, which offers a great opportunity to network with other EPFIs, as well as to learn more about the EP Association.