The
Equator Principles (EPs) is a risk management framework, adopted
by financial institutions, for determining, assessing and managing
environmental and social risk in projects and is primarily intended
to provide a minimum standard for due diligence to support responsible
risk decision-making.
The
EP apply globally, to all industry sectors and to four financial
products 1) Project Finance Advisory Services 2) Project Finance
3) Project-Related Corporate Loans and 4) Bridge Loans. The
relevant thresholds and criteria for application is described
in detail in the Scope section of the EP.
Currently
80 Equator Principles Financial Institutions (EPFIs) in 35 countries
have officially adopted the EPs, covering over 70 percent of
international Project Finance debt in emerging markets.
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 Project-Related
Corporate Loans to projects where the client will not, or is
unable to, comply with the EP.
While
the EP are not intended to be applied retroactively, EPFIs apply
them to the expansion or upgrade of an existing project where
changes in scale or scope may create significant environmental
and social risks and impacts, or significantly change the nature
or degree of an existing impact.
The
EPs have greatly increased the attention and focus on social/community
standards and responsibility, including robust standards for
indigenous peoples, labour standards, and consultation with
locally affected communities within the Project Finance market.
They have also promoted convergence around common environmental
and social standards. Multilateral development banks, including
the European Bank for Reconstruction & Development , and
export credit agencies through the OECD Common Approaches are
increasingly drawing on the same standards as the EPs.
The
EPs have also helped spur the development of other responsible
environmental and social management practices in the financial
sector and banking industry (for example, Carbon Principles
in the US, Climate Principles worldwide) and have provided a
platform for engagement with a broad range of interested stakeholders,
including non-governmental organisations (NGOs), clients and
industry bodies.
The
Equator Principles (EP) III is effective from 4 June 2013.
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