IFC Conducts an Equator Principles Workshop

Washington D.C. 18 March 2004

IFC held a workshop on social risk assessment for banks which have adopted the Equator principles. The workshop was held at IFC's offices in Washington on 11 March, 2004. Among the topics discussed were IFC's experience in managing social assessments and issues relating specifically to resettlement, indigenous people and cultural property. There was discussion of how to identify vulnerabilities to social issues in project development. Other topics discussed included sharing of project benefits with local communities, transparency, and promoting effective consultation and stakeholder engagement.

 

 

BTC Project is the First Major Test of the Equator Principles

London - 27 February 2004

The $3.6 billion Baku-Tblisi-Ceyhan oil pipeline project, financing for which closed on February 3, 2004, was the first major test of the Equator Principles. Because implementation of the project required resolution of sensitive environmental and social issues, the project was categorized by banks as a "Category A" project under the Equator Principles. BTC thus became the first project treated as Category A under the Equator Principles.

BTC will transport oil from Azerbaijan through Georgia to the Turkish port of Ceyhan. The principal developer and operator of the pipeline is BP, a global energy company with world-class capabilities to manage complex environmental and social situations. The pipeline solves the thorny question of how to commercialize Caspian oil without shipping it through the fragile and overcrowded Bosporus Straits.

The project presents a number of environmental and social challenges, including pipeline routing near potentially critical natural habitats, the claims of a number of groups for special recognition and compensation, seismic activity along parts of the route, and political turmoil in Georgia. The financing consortium initially included four private-sector banks, as well as IFC, EBRD and OPIC, which each have extensive environmental and social policies and staff experienced in environmental and social issues evaluation. The consortium developing BTC conducted comprehensive reviews. The senior lenders engaged an independent consultant, Mott MacDonald, to conduct due diligence and assess compliance with the Equator Principles. It was decided that an independent consultant would also be used to assess the project going forward and to monitor the project's compliance with its environmental and social management plan.

There was opposition to the project development by several NGOs which alleged 127 "violations" of IFC Safeguard Policies and therefore of the Equator Principles. IFC took the unusual step of issuing a rebuttal to the NGO criticism.

The banks involved in the financing evaluated the criticisms and conducted extensive due diligence on environmental and social issues with BP as well as with IFC and other agencies involved in the financing. As a result of their evaluations, eight banks which have adopted the Equator Principles concluded that the project had complied with IFC Safeguard Policies and the Equator Principles. Mott MacDonald confirmed this assessment. The IFC Board also concluded that its Safeguard Policies had been met. US Eximbank, which effectively applies IFC Safeguard Policies, came to the same conclusion, and the project was also approved by EBRD, OPIC and four other export credit agencies.

BTC is the first major application of the Equator Principles. Because the Safeguard Policies referenced in the Equator Principles are processes and questions to be asked, they require significant judgment on the part of the banks. This means that, in spite of intensive work and good faith by all parties, people can differ on their conclusions. In this case, while some NGOs have a different view, the private-sector banks, the multilateral and bilateral agencies, the sponsors and the host governments all believe that this project incorporates significant measures to respect the environment and social concerns, and should go forward.

There is extensive public disclosure and consultation concerning BTC. The project maintains a comprehensive website. NGO criticisms are also accessible on the web, as is IFC's rebuttal of NGO criticism. ABN AMRO issued a statement on its application of the Equator Principles to the BTC project. Mott MacDonald's report is also available.

For more information on BTC, see:

BTC project website
WWF criticism
IFC rebuttal
ABN AMRO statement

 

KBC Adopts Equator Principles

Brussels - 27 January 2004

KBC today announced its adoption of the Equator Principles, which provide a framework for banks to manage environmental and social issues related to the area of project financing.

Jan Vanhevel, Managing Director of the KBC Bank and Insurance Holding Company, has declared that ‘the adoption of the Equator Principles supports KBC’s longstanding commitment to environmental and social responsibility in all its activities, both domestically and internationally’. KBC will apply the Equator Principles to its project finance activities around the world.

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Banks Hold Implementation Conference

Amsterdam - 5 January 2004

Eighteen banks which have adopted the Equator Principles met in Amsterdam on 15 December, 2003, for an Implementation Conference. The topics discussed by the banks included the Equator Principles' categorization process, training in environmental and social issues assessment, internal business and risk management models being put in place to deal with banks' implementation of the Equator Principles, and the timing of each banks' implementation steps. There was also discussion of consultants with environmental or social issues capability. IFC sent several representatives to the meeting to discuss IFC's training program for banks which have adopted the Equator Principles. The conference resulted in in banks sharing their implementation steps to date, discussing implementation areas of concern, and learning more about each others' risk management processes.

 

CIBC Adopts Equator Principles

Toronto - 03 December 2003

CIBC today announced its adoption of the “Equator Principles.” The Principles are a voluntary set of environmental and social screening criteria and guidelines adopted by major international banks, based on processes established by the International Finance Corporation (IFC), the private-sector investment arm of the World Bank. The Principles apply globally to development projects with a capital cost of US$50 Million or over in all industry sectors.

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Mizuho Adopts the Equator Principles

Tokyo - 27 October 2003

Mizuho Corporate Bank, Ltd. has become the first Japanese bank to adopt the Equator Principles. This brings the total number of banks adopting the Equator Principles to 18, and the number of countries represented to 11. In a press release, Mizuho said it will apply high environmental and social standards for its project finance business in order to carry out its social obligations to promote both economic development, and environmental and social preservation. As an international financial institution, Mizuho wishes to contribute to the establishment of international environmental and social standards. Mizuho extends loans to 70% of listed Japanese companies and serves as the main lender to 40% of them.

 

Standard Chartered Adopts Equator Principles

London - 8 October 2003

Standard Chartered today announced the adoption of the Equator Principles as a basis for managing environmental and social issues in project financing. “We are committed to minimising the environmental and social impacts associated with our operations. Adopting the Equator Principles will reinforce the Bank’s long established environmental and social risk evaluation process. We believe in sustainable business and are pleased to adopt best practice”, said Group Chief Executive Mervyn Davies.

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HSBC adopts the Equator Principles

London - 4 September 2003

HSBC has adopted the Equator Principles to help the Group assess the environmental and social impact of commercial lending proposals. This will reinforce the bank’s long established environmental and social risk evaluation process and its position as one of the leading companies in environmental impact management.

The Equator Principles are a set of voluntary guidelines, developed by major international banks, that establish a common framework to address the environmental and social issues that arise in financing projects and ensure that they are realised according to sound environmental management practices.

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Dresdner Bank adopts Equator Principles

Frankfurt - 18 August 2003

On August 18 2003 Dresdner Bank has adopted the  EQUATOR-PRINCIPLES. The principles are  a set of voluntary guidelines and require projects worth more than US$50 million whose potential adverse environmental impacts are more than minimal to be subject to an Environmental Assessment (EA) addressing the key environmental and social issues. The Equator Principles were initiated by  the International Finance Corporation, a Worldbank subsidiary, in cooperation with a group of several financial institutions. Dresdner Bank’s signature  brings the total number of banks that have adopted the Equator Principles to 14. The codex is likely to become a generally acknowledged guideline for international project financing activities.

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MCC, a Leading Italian Bank in Project Financing, Adopts the Equator Principles

Rome - 29 July 2003

MCC S.p.A, a leading Italian bank in project financing, is the first Italian bank to adopt the "Equator Principles", a set of voluntary guidelines developed by major international banks to address the environmental and social issues arising from financing projects and ensure that financed projects are realised according to sound environmental management practices.

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