An ngos principled effort to stop the financing of a paper pulp mill in uruguay vivian lee i. This new iteration will expand adhering financial institutions commitments to avoiding or addressing the social and environmental impacts of development projects, reporting on climate change risks and engaging with affected communities and. The objective of this article is to encourage impact assessment practitioners to set aside temporarily the. Investigating compliancenon compliance with the equator. Uk green investment bank plc gib formally adopted the equator principles ep on 2nd. The equator principles is a risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk in project finance. The equator principles association epa has published a finalised version of equator principles iv epiv following consultation. On july 6, 2006, 41 of the worlds largest financial institutions released a revised set of the equator principles, the muchanticipated new version of voluntary standards originally adopted in june 2003 by the equator principle financial institutions epfis as a benchmark for environmental and social responsibility in project financing, particularly in developing countries. These 12 years of existence can be equated to the phase of an adolescent still seeking to establish relevance in an atmosphere of flux and uncertainty. The physics of the space elevator semantic scholar. These implementation guidelines for the equator principles hereinafter the guidelines present the way the principles are implemented by mufg bank as well as how their application is reported on the banks webpage referring to the principles hereinafter the webpage. Equator principles implementation october 2019 the equator principles are adopted by financial institutions to assess, monitor and report environmental and social risk in project finance, project financerelated corporate loan investments and bridge loans.
Why does abn amro have an equator principles policy. Project finance and the equator principles reporting on. A risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and. The equator principles are now undergoing their third iteration. Abbreviated equator principles equator principles, 20. As of july 2019, 96 equator principles financial institutions epfis from 37 countries have adopted the equator principles. These implementation guidelines for the equator principles hereinafter the guidelines present the way the principles are implemented by btmu as well as how their application is reported on the banks webpage referring to the principles hereinafter the webpage. The equator principles ep are a voluntary set of standards adopted by financial institutions for determining, assessing and managing environmental and social risks in projectrelated transactions. Today, there are fortyfive banks who have adopted the ep, comprising over 80% of the project. The equator principles ep are a framework used by financial institutions to determine, assess and manage environmental and social risk in projects. Aravind department of physics, worcester polytechnic institute, worcester, massachusetts 01609 received 1 may 2006. Implementation guidelines for the equator principles. A financial industry benchmark for determining, assessing. Jun 11, 2009 in june 2003, a group of major financial institutions adopted a set of voluntary guidelines known as the equator principles with the intention of creating an industry benchmarking for assessing and managing environmental and social issues in the project finance sector.
In june 2003, a group of major financial institutions adopted a set of voluntary guidelines known as the equator principles with the intention of creating an industry benchmarking for assessing and managing environmental and social issues in. Announced on june 4, 2003 major step towards achieving sustainable development. Jul 23, 2019 the equator principles eps is a risk management framework adopted by financial institutions to determine, assess and manage environmental and social risks of the projects they finance. The equator principles environmental and social risk.
The equator principles association epa has published a. The latest fourth iteration of the equator principles ep4 is due to come into effect on 1 july 2020. Hsbcs procedures for applying the equator principles are included in its credit risk policies. Ten teenage years of implementation and a search for outcome olaf weber and emmanuel acheta 5 of an adolescent still seeking to establish relevance in an atmosphere of flux and uncertainty. Mizuho bank formerly mizuho corporate bank recognized early on that the equator principles would become a new business standard in international financing for environmental and social risk management of largescale projects and therefore within six months of their inception in june 2003, mizuho bank became the first asian bank to adopt the equator principles in. This paper shows that as of november 20, epfis have increased from the original 10 founding members to 78 members, which. Equator principles iii reporting principle as well as aligning with the groups esg commitments and embedding epiii assessment in the loan decision process. The equator principles also require production of an environmental management plan principle 4, which is yet to be published. An overview of banktrackepfi engagement on the equator. Proect finance and the equator principles 1 about project finance project finance is the most common form of finance to which the equator principles are applied. Equator principles role in international project finance. Citi was one of the founding members of the equator. First anniversary of the equator principles growing impatience with ngos on what equator principles deliver on the ground results.
Key epiii categorisation, industry, country and other details are recorded through the loan pipeline system. The equator principles in 2003, westpac was one of 10 global founding signatories to the equator principles. Equator principle final ppt sustainability environmental. Equator principles of 2006 a set of voluntary guidelines for assessing and managing social and environmental risks to project financing an initiative from the banking and financing sector first initiated in 2002 by various banks and the world banks international financing corporation.
The equator principles, launched in 2003, were updated in 2006 and most recently in june 20. Epiv broadens the scope of the equator principles eps to cover a wider range of loans, including project refinancing and acquisition financing, as well as. The equator principles ep can be defined as a voluntary risk management. The equator principles are a framework and set of guidelines for evaluating social and environmental risks in project. The equator principles apply globally and to all industry sectors. The sustainability report contains chapters on employees, clients and society as well as environmental management and sustainabilityrelated products and services. More than 90 banks and financial institutions have voluntarily adopted the equator principles, which are based on ifcs performance standards. Based on sustainability standards from the international finance corporation ifc and launched in 2003, the equator principles have. Mizuho bank formerly mizuho corporate bank recognized early on that the equator principles would become a new business standard in international financing for environmental and social risk management of largescale projects and therefore within six months of their inception in june 2003, mizuho bank became the first asian bank to adopt the equator principles in october 2003.
Review of the equator principles draft ep4 released for. Established in 2003, the eps have been adopted by 96 financial institutions in 37 countries. They are an evolving initiative, which has adapted over time to address the growing expectations from. The revised equator principles press release carter. The equator principles eps, launched in 2003, are a financial industry benchmark for managing environmental and social risks. Some banks were reluctant to accept the principles as a standard. These implementation guidelines for the equator principles hereinafter the guidelines. Principle 10 of the 20 version of the equator principles, which states that the epfi will report publicly, at least annually, on transactions that have reached financial close and on its equator principles implementation. The equator principles, launched in 2003, were updated in 2006 and then in june 20. The list represents an update of the first version, which was published in 2003. This chapter will focus on an overall assessment of implementation of the equator principles eps based on survey research from participating banksequator principle financial institutions epfis.
Inclusion of stronger soc ioenvironmental standards as. Woersdoerfer discusses the equator principles relationships to business ethics and human rights duration. Implementation guidelines for the equator principles established on september 28, 2012 revised on april 1, 2018. To implement the equator principles, the bank drafted its own policy that fosters abn amro. Equator principles ep a basic framework for the management of. For transactions that fall under the scope of the equator principles, our global businesses must complete the appropriate implementation template, including the requirements for each applicable principle, and conduct a risk analysis and recommendation through the credit risk process. As of april 2016, 83 equator principles financial institutions epfis from 36 countries have adopted the equator principles. Principle 2 of the eps has been amended to require environmental and social impact assessments esias to. Pdf on feb 1, 2005, franck amalric and others published the equator principles. Environmental and social management system and equator principles action plan.
Hsbc voluntarily adopted the equator principles when they were first launched in 2003. The equator principles eps is a risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk in projects. On june 4, 2003, ten leading banks from seven countries announced the. Further revision of ifc performance standards in 2012 and the need to strengthen environmental and social risks management, resulted in the launch of third version of the eps ep iii. The draft text, which will be voted on by participating banks next month, includes some. One year on from the release of the latest edition of the equator principles ep iii in 20, it is clear from the literature that there is a lack of understanding or any general consensus amongst academics, practitioners and critics as to whether the equator principles ep are. Epiv is the fourth version of the eps adopted by the epa since they were first introduced in 2003. Equator principles implementation green investment group. Equator principles financial institutions epfis commit to implementing the ep in their internal environmental and social policies, procedures and standards for financing projects and will not provide project finance or projectrelated corporate loans to projects where the client will not, or is unable to, comply with the equator principles. Principles in 2003 and contin ues to be a leader in the equator. Updated equator principles with stronger standards and a broader scope were finalized in november 2019 and are set to come into effect in july 2020. Eps were first revised in july 2006, to align it with the ifc performance standards april 2006. The equator principles eps were thus formulated in june 2003. This document contains selected information and examples to support the understanding of the requirements in, and implementation of, the equator principles and does not establish new principles or requirements.
Developing countries environmental aspects environmental degradation management environmental impact analysis laws, regulations and rules. An update of the equator principles ep iii was adopted in 20. Are the equator principles greenwash or game changers. In june of 2003, ten financial institutions signed on to the equator principles ep, a set of voluntary social and environmental guidelines governing global project finance transactions. Introduction announcement of equator principle equator principle.
It is primarily intended to provide a minimum standard for due diligence to support responsible risk decisionmaking. Banktrack slams equator banks for trying to block higher environmental policies at world bank. On june 4, 2003, 10 international banks announced that they had adopted the equator principles. Consultation processes were flawed, the project failed to provide sufficient information to stakeholders, and did not take consultees views into account. In addition, epiii categorisation, compliance and details of key esg risks and.
The principles were originally drawn up to address the sustainability impact of project finance. A total of 15 new project finance deals in emerging markets were screened in 2012 for their compliance with the principles. The equator principles financial institutions epfis have consequently adopted these principles in order to ensure that the projects we finance are developed in a manner that is socially responsible and reflect sound environmental management practices. The equator principles apply the four financial products described belowto when supporting a new. The equator principles eps is a risk management framework adopted by financial institutions to determine, assess and manage environmental and social risks of the projects they finance. Environmental and social risk in project financing, july 4, 2003 refer appendix 1. These financial institutions are known as equator principles financial institutions. It is primarily intended to provide a minimum standard for due diligence and monitoring to support responsible risk decisionmaking. As at february 2019, 94 adopting financial institutions in 37 countries have. Equator principles were at the time supported by some of the leading global financial institutions representing roughly. The equator principles implementation note disclaimer. Abn amro is one of the founding members of the equator principles, and has adhered to the principles since their inception in 2003. The equator principles financial institutions epfis have consequently adopted.
The ep are adopted and applied voluntarily by whats known as equator principles financial institutions, or epfis. This new iteration will expand adhering financial institutions commitments to avoiding or addressing the social and environmental impacts of development projects, reporting on climate change risks and. The guiding principle in the development of stard was to select items that, when reported, would help readers to judge the potential for bias in the study, to appraise the applicability of the study findings and the validity of conclusions and recommendations. The equator principles eps, launched in 2003, are a financial industry benchmark for managing environmental and social risks see. The equator principles consist of three categories.
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