Op Ed: The value of maintaining Equator Principles as a risk management framework
12 August, 2019 EP News
London, 12 August 2019
A review of the fourth version of the Equator Principles (EP4) is currently ongoing: equator-principles.com/ep4. The deadline for comment on the draft of EP4 has been extended to 23 August.
We greatly appreciate the level of engagement with a diverse range of stakeholders which has resulted in both positive feedback and constructive criticism. All comments provided will be duly considered and discussed while finalising the EP4 text.
As part of this process, several stakeholders have questioned the ambition level of the EP4 update, and have suggested the EPs shift from a risk framework to a policy platform.
We understand the rationale for these suggestions — indeed this was discussed extensively at the 2018 Annual General Meeting of EPFIs. We concluded that the EPs add the most value in remaining true to our original design as a risk management framework for determining, assessing and managing environmental and social risk in projects.
The EPA includes nearly 100 commercial banks, development banks, and export credit agencies, who have varying geographical footprints, sizes and mandates. All are subject to their own policies as well as the laws and regulations in the countries in which they operate. It is up to each EPFI to set the ambition of their own policies and risk appetite. Each EPFI is also able to participate in various policy-setting initiatives and associations external to the Equator Principles.
The strength of the EPs and their market positioning is in setting a minimum common framework to help financial institutions come together to assess and manage environmental and social risks in project-related financings. Keeping in mind EPA’s commitment to adhere to a regular and periodic update cycle of the Principles, we will continue to evaluate this focus in future updates.
– The Steering Committee and EP4 working group leads of the Equator Principles Association
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