The Equator Principles III - 2013

The Equator Principles (EP) III is effective from 4 June 2013.

TRANSLATIONS

EP III is now available for download in the following languages:

Please note that these translations were carefully prepared to ensure the accuracy and integrity of the content, however, the EP Association does not accept any responsibility for omissions or discrepancies, and cannot guarantee that users will interpret the content as originally intended. The official version of EP III is published in English and users should refer to it should they have any doubts in their understanding.

TRANSITION PERIOD

The transition period for EP III ended on 31 December 2013 and EP III is mandatory for all new transactions (where the mandate is signed after 31 December 2013) from 1 January 2014. EP III does not apply retroactively therefore EP Association Members are not expected to switch from EP II to EP III for transactions where the mandate was signed before 1 January 2014.

The EP Association Steering Committee accepts that in certain situations there might be legal constraints that prevent EP Association Members applying EP III from 1 January 2014, however each member should make all necessary efforts to ensure EP III is incorporated into their institution's review of transactions according to their own risk management frameworks and engagement with clients from this date.

OVERVIEW OF KEY CHANGES - EP II TO EP III

Changes Reflecting Priorities and Recommendations from the EP Strategic Review
TOPIC EP II EP III
Scope
  • Project Finance
  • Project Finance Advisory
  • Project Finance
  • Project Finance Advisory
  • Project-Related-Corporate Loans
  • Bridge Loans
EP Association Member Public Reporting

High level reporting:

  • Number of “Transactions Screened and Closed” and categorisation.
  • Info on implementation process.

Minimum requirements:

  • Number of “Projects Closed”  including: categorisation, sector, region and whether an independent review has taken place.
  • Project Names for Project Finance deals (subject to client consent).
  • Info on EP implementation process including roles and responsibilities, staffing, policies and procedures.
  • Details on training mandatory for first year of EP adoption.
Client Public Reporting
  • Not applicable.
  • Online summary of Environmental and Social Impact Assessment.
  • Greenhouse Gas (GHG) emission levels for projects emitting over 100,000  tones of CO2 annually during operational phase.
Changes to Align with the Updated IFC performance Standards
TOPIC EP II EP III
Social
  • Social risks due diligence.
  • “Free Prior Informed Consultation”.
  • Social and relevant human rights due diligence.
  • “Free Prior Informed Consent” in specific circumstances.
  • Explicit reference to address human rights in the Preamble.
  • Reference to “Guiding Principles on Business and Human Rights, Implementing the UN Protect, Respect and Remedy Framework”.
Climate
  • As part of World Bank Group Environmental, Health and Safety (EHS) guidelines and general due diligence.
  • Attention in due diligence.
  • Alternative analysis for high emitting projects in line with Performance Standard 3.
  • Explicit reference to address climate change in the Preamble.
  • Project reporting requirements on GHG emission levels:
    • Mandatory: projects emitting + 100K tonnes of CO2.
    • Encouragement: projects emitting + 25K tonnes of CO2.
Language Alignment
  • Environmental and social risks.
  • Environmental and social risks and impacts.
Changes to Address Consistency and Support EP Implementation
TOPIC EP II EP III
Information Sharing
  • Not applicable however though carried out on an informal basis.
  • Formalised approach for EP Association Members to share information related to environmental and social matters with other mandated financial institutions .
Country Designation
  • Assessment process in High-Income OECD Countries is an acceptable substitute for the IFC Performance Standards.
  • Assessment process in “Designated Countries” is an acceptable substitute for the IFC Performance Standards
  • Currently the ‘Designated Countries” list refers to High-Income OECD Country list, however the list is being reviewed to verify whether it is appropriate.
  • It is expected that the 'Designated Countries' list will not be significantly different from the current High-Income OECD Country list.
Glossary of Terms
  • Not applicable.
  • Inclusion of a Glossary of Terms which includes detailed definitions of Environmental and Social Impact Assessment (ESIA), Environmental and Social Management plan (ESMP), and Environmental and Social Management System (ESMS).
Implementation Notes
  • For Loan Documentation.
  • For Loan Documentation.
  • Under development - Implementation Notes for Climate Change and Reporting requirements, and question and answers on Scope.

EQUATOR PRINCIPLES II - 2006

EP II can be applied to transactions where the mandate was signed prior to 1 January 2014.

Related Content: