Equator Principles (EPs)
The Equator Principles are a voluntary set of standards, adopted by approximately 100 financial institutions that are termed Equator Principles Financial Institutions (EPFIs). While the majority of these institutions are in the private sector, several national export credit agencies are also EPFIs. The EPs establish a management framework for determining, assessing, and managing social and environmental risk in projects. EPFIs commit to implementing the current version of the EPs in their internal environmental and social policies, procedures, and standards for financing projects. EPFIs will not provide Project Finance, Advisory Services, Project-Related Corporate Loans, or Bridge Loans to select projects where the client will not, or is unable to, comply with the EPs.
Equator Principles (EPs)
Created In: 2003
Member Countries: 37
Signatory Banks: 94
Mission: Serve as 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 EPs are based on the International Finance Corporation’s (IFC) Performance Standards on Environmental and Social Sustainability and the World Bank Group’s Environmental, Health, and Safety Guidelines.
The EP Association manages and ensures the long-term viability of the EPs. The Steering Committee of the EP Association manages and coordinates between EPFIs, Working Groups, and EPFI management. The Governance Rules, updated in December 2013, provide guidance on the processes for the management, administration, and development of the EPs.
There is currently no official process in place at the level of the EPs or the Association to hold the EPFIs accountable for noncompliance with the EPs or to ensure independent and transparent access to remedy for project affected people. This is a major gap in the legitimacy and credibility of the EPs. The question of accountability is one focus of our advocacy in the Equator Principles Revision Process (EP4), and in our collaboration with BankTrack.
The EPs only require that the borrower establish a project-level grievance mechanism to address concerns and facilitate resolution of grievances about the project’s environmental and social performance; while project-level mechanisms could provide affected communities with some measure of redress if operating properly, they lack independence and often fail to account for all potential harms that could be wrought by EPFIs and their clients.
To learn more about the scope and application of the EPs, please see our Accountability Resource Guide.
Accountability Counsel works closely with BankTrack and other partners to strengthen accountability and access to remedy through the EPs. There is currently no centralized accountability office for Equator Principles Financial Institutions (EPFIs) and many of these institutions do not have a mechanism to address harms caused by their financing. Instead, they rely on borrowers to take on this responsibility.
Engagement with the Equator Principles Association
After years of advocacy, civil society met with the Equator Principles Association (EPA) steering committee on 28 January, 2016 in London to once again emphasize the importance of transparency and respect for human rights and the environment. Accountability Counsel participated in the meeting, raising questions about the lack of an EP accountability office. Although there were some commitments to improve transparency and reporting, the EPA did not commit to creating a grievance mechanism. In subsequent calls with the EPA, we have continued to emphasize the need for a robust accountability office.
EP4 Equator Principles Revision Process
Accountability Counsel is currently participating in the Equator Principles revision process, which will create the fourth version of the EPs – EP4. This initiative grew out of the 2017 Equator Banks, Act! campaign, which Accountability Counsel supported, and a series of problematic projects financed by EPFIs, including the Dakota Access Pipeline (DAPL) project. The EPA committed to reviewing the EPs to address issues including human rights, climate change, the rights of Indigenous Peoples, and the scope of applicability. We have been providing input to the EPA, both in our individual capacity and as a larger group of CSO stakeholders, to advise on the strengths and weaknesses of the EP’s policies and procedures. We have trained our focus on the need to increase transparency and accountability at the EPs, specifically calling out the lack of an accountability office and the failure of the EPs to cover all financial products within an EPFI’s portfolio. We have additionally called on the EPA to ensure that the EP4 process is inclusive of a wide variety of stakeholder voices. Alongside our partners at BankTrack, Accountability Counsel contributed to the drafting of the Open Letter to the Equator Principles Financial Institutions, calling on EPFIs to respect human rights, strengthen transparency, and ensure access to remedy through the institution of a legitimate, independent complaints mechanism.
On 16 October, 2018, Accountability Counsel participated in a meeting in Washington, DC with CSO partners, Indigenous leaders, and EPFIs, which raised important points on the importance of accountability for harm caused by EPFIs. The meeting was held on the sidelines of the 2018 Equator Principles Annual Meeting in DC. During the Annual Meeting, attendees recognized the need for improvement in several areas not currently explicitly included in the targeted EP4 review, including accountability and grievance handling.
In December 2018, the EPA released a summary report of the initial round of stakeholder feedback on the EPs and review process that mentioned many of our concerns. The EPA is currently considering the feedback and is expected to release a draft of the EPs for public comment in early 2019.
Outreach to EPFIs
Accountability Counsel continues to seek new opportunities to work with EPFIs individually to develop new robust and effective mechanisms. As a result of advocacy from Accountability Counsel and other civil society partners, the Export-Import Bank of the United States (EXIM), an EPFI, created the Environmental and Social Project Information and Concerns Form. The portal is a promising development and a step toward greater accountability at EXIM. We are continuing to work with EXIM to move the portal towards being a robust accountability mechanism.
- Past Advocacy