Equator Principles Celebrate Five Years of Positive Environmental Impact and Improved Business Practices

Sixty of the world´s leading financial

institutions today mark the fifth anniversary of the Equator Principles

(EPs), voluntary standards for financial institutions to manage

environmental and social risk in their project finance transactions.
The EPs have become the global standard for project finance and have

transformed the funding of major projects globally. In 2007, of the

US$74.6 billion total debt tracked in emerging markets, US$52.9 billion

was subject to the EPs, representing about 71 per cent of total project

finance debt in emerging market economies, according to Infrastructure

Journal.
The EPs are now considered the financial industry "Ëœgold

standard´ for sustainable project finance. The

Principles were revised in June 2006 to reflect current implementation

experience including introduction of a public reporting requirement, as

well as changes made by the International Finance Corporation (IFC) to

its environmental and social standards. They continue to evolve as more

sophisticated funding is undertaken.
An Outreach Committee has been formed and is actively engaged with banks

in China, Russia, India and other key emerging markets. Stakeholder

engagement remains an important element of the EP´s

implementation and the group regularly meets to share experiences with

various stakeholders.
Governance procedures previously handled on an informal basis are now

being formally instituted to ensure long-term viability and ease of

management of the Equator Principles Financial Institutions (EPFIs).

These include formalizing the EPFI´s operating

structure, voting procedures and annual meeting arrangements, and

monitoring of fulfillment of the public reporting requirement. The EP

website continues to be developed to provide greater transparency. The

EPFI´s management structure is now posted on

the website along with direct links to the annual reports of 53

financial institutions describing their implementation experience.
The EPs´ success lies in the cooperation and

trust among the participating financial institutions working to achieve

a common good. Institutions implement the EPs independently, always

maintaining client confidentiality, while sharing best practice, to

ensure an evolving and improving standard.
Although limited to project finance, the EPs have helped spur the

development of other responsible environmental and social management

practices in the financial sector and banking industry. Other business

areas have benefited from the spillover effect improving environmental

outcomes throughout the banking industry. For example, in the US several

banks recently announced their adoption of the Carbon Principles to

manage carbon risk in thermal power investments.
The EPs have promoted convergence around common environmental and social

standards. Multilateral development banks, including the European Bank

for Reconstruction & Development (EBRD), and export credit agencies

through the OECD Common Approaches are increasingly drawing on the same

standards as the EPs. Such convergence will result in improved

environmental and social outcomes as project sponsors begin implementing

these standards from the earliest stages of project planning and design.
When first launched in June 2003 in Washington DC, 10 initial adoptees

agreed to lend only to those projects where the borrower provided

evidence of compliance with these standards, and committed to developing

them in a socially responsible manner and according to sound

environmental management practices.
The financial institutions agree that they will "not

provide loans directly to projects where the borrower will not or is

unable to comply with our environmental and social policies and

procedures." The 60 institutions that today

apply the EPs recognize their role and responsibility for promoting

sustainable investment. The EP framework, based on environmental and

social standards of the International Finance Corporation (IFC), the

private sector arm of the World Bank Group, now apply to projects with

capital costs above USD10 million.
These 60 financial institutions constitute a broad cross-section of the

financial industry including most of the world´s

major banks as well as insurance companies, bilateral development

agencies, and export credit agencies. They also represent a wide

geographic distribution coming from all continents and include banks

from Argentina, Brazil, Chile, Uruguay, Togo, South Africa and Oman.
Note to editors:
Full text of the EPs is available at www.equator-principles.com including translations in Chinese

French, Japanese and Russian. Translations in Portuguese and Spanish

will follow.
The full list of Equator Principle Financial Institutions are: http://www.equator-principles.com/
For Frequently Asked Questions about the Equator Principles, go to:
http://www.equator-principles.com/faq.shtml