The Equator Principles (EP) have become the financial industry standard for environmental and social risk management in projects. Financial institutions adopt the EPs to ensure that the projects they finance are developed in a socially responsible manner and reflect sound environmental management practices. By doing so, negative impacts on project-affected ecosystems and communities should be avoided where possible, and if unavoidable, should be reduced, mitigated and/or compensated for appropriately.
Adopters believe that the adoption of and adherence to the EPs offers significant benefits to them, their borrowers and local stakeholders through their borrowers’ engagement with locally affected communities. Adopters should be able to better assess, mitigate, document and monitor the credit and reputation risk associated with financing development projects.
Additionally, the collaboration and learning on broader policy application, interpretation and methodologies between adopters, and with their stakeholders, helps knowledge transfer, learning and best practice development. The adopters‘ role as financiers affords them opportunities to promote responsible environmental stewardship and socially responsible development.