When Seeking Long-Term Profit, Consider Long-Term Environmental Risks

6 April 2012 - Triple Pundit

While investment banks have typically financed whatever clients request, the Equator Principles developed by the World Bank have set environmental and social guidelines that have taken hold because they also address and mitigate investment risk. For project finance, which includes $315 billion of annual debt and equity going to new energy or infrastructure developments worldwide, the Equator Principles are applied in nearly 75 percent of those transactions, many of which happen in emerging economies (Project Finance; Environmental Data Services 2008). These principles have gradually spilled over into the everyday financings of some investment banks. Read More.

Are Thai Bankers' Ready for the Equator Principles? An Interview with the Secretary-General of The Thai Bankers Association

4 April 2012 - IFC

As a growing number of Thai banks finance ever more hydropower projects in the Mekong region, IFC is striving to raise the sustainability of such multi-million dollar infrastructure investments by familiarizing banks with environmental and social risk management tools.  Earlier this month, IFC and The Thai Bankers’ Association held a workshop in Bangkok to discuss how Thai banks can manage their exposure to environmental and social risks while taking leadership in fostering sustainable economic growth in the Mekong region. Read More.

Five Questions about the Equator Principles

2 April 2012 - Earth Capital Partners, Richard Burrett

"The Equator Principles (EPs) are a voluntary set of standards for determining, assessing and managing environmental and social risk in project financing. Project financiers often encounter environmental and social issues that are both complex and challenging, particularly with respect to projects in the emerging markets.  Equator Principles Financial Institutions (EPFIs) commit to not providing loans to projects where the borrower will not or is unable to comply with their respective environmental and social policies as well as procedures that implement the EPs. The Equator Principles were developed by private sector banks and launched in June 2003. The banks have modeled on the environmental and social standards and policies of the International Finance Corporation (IFC); now called Performance Standards. The Equator Principles have become the de facto standard for banks and investors on how to assess major development projects around the world." Read More.

Equator Principles III better be good

29 March 2012 - BankTrack, Johan Frijns

The Equator Principles Association (Association) this week announced a new delay in the release of the third version of the Equator Principles (EPIII).  In a brief statement, the Association stated that it is “continuing internal discussions with its members on the first draft of EP III and as a result the overall timeline for the EP III Update process has been extended again” The release of EPIII is now foreseen for October 2012, but “The timeline might be subject to further extension if deemed necessary.”  Read More.

The Equator Principles are being updated: under “EP III” process

20 February 2012 - Forest Peoples Programme

Principle 3 provides the ‘Applicable Social and Environmental Standards’ which are supposed to be implemented according to the requirements of the remaining 9 principles. The Applicable Social and Environmental Standards are the Performance Standards of the International Finance Corporation (IFC) plus other relevant Environmental, Health and Safety Guidelines, although ‘justified deviation’ from these standards is permitted. In August 2011, the IFC Board adopted a revised set of Performance Standards and, in late 2011, the Equator Principles Association adopted these revised IFC Performance Standards in their entirety into the Applicable Social & Environmental Standards, Principle 3, of the Equator Principles. This incorporation became effective on 1 January, 2012. Read More.

Banking Industry in China: More regulations for being socially responsible

15 February 2012 - CSR Asia, Brian Ho

Since the second half of 2011 there have been various news reports about the difficulties for companies, especially small and medium sized enterprises, to receive business loans in China due to a tightening of bank policy. Some banks have been criticised for increasing the interest rates through different measures and causing SMEs in China to go for usurious loans. There are some cases where business people have committed suicide or have become “runaway bosses” as they cannot repay the business loan. However, when comparing the banking industry with other industries, profit in the financial sector is maintained at high level. Criticism about the social responsibility of banks, especially state-owned ones, has appeared in mainstream media and the public has come to the consensus that banks should be more socially responsible and support those companies and local economies that need help. CSR has become an important agenda for the banking industry. Read More.

Sustainability Conference in Seoul

10 December 2011 - Prizma Blog

Prizma’s Bill Kennedy was recently invited to participate at the 6th Sustainability Management Conference in Seoul, Korea.  The focus of the event, sponsored by the Korean Standards Association and the Ministry of Knowledge Economy, was an examination of the IFC Performance Standards, the Equator Principles and OECD’s Guidelines for Multinational Enterprises and the way in which companies and banks have been responding to them.  Read More.

Non-compliance with equator principles: Constraint to obtaining finance for energy projects

8 December 2011 - Business Day Online, Ayodele Oni

The Equator Principles represent a credit risk management framework for determining, assessing and managing environmental and social risk for transactions requiring Project Finance. Project finance on the other hand, is a means of funding in which the lender or financier looks primarily to the revenues generated a project, as opposed to the balance sheet, both as the source of repayment and as security for the exposure. Project Finance, plays an important role in financing energy projects and infrastructural development throughout the world. This financing method, is usually for large, complex and expensive installations, infrastructure and structures and would include, for example, power plants, chemical processing plants, mines, transportation infrastructure such as trains and telecommunications infrastructure. Read More.

Putting some bite into the Equator Principles

29 November 2011 - Project Finance Magazine

There has been persistent scepticism about the Equator Principles’ ability to encourage best practice at participating banks. But evidence from the mining industry is that they are changing sponsor behaviour. By Christopher Langdon and Claudia O’Brien, partners, Latham & Watkins. Since 2003, Equator Principles financial institutions, most of them major banks, have provided about 85% of the world’s project finance capacity. These institutions provide financing only to projects that comply with the Equator Principles, a voluntary set of guidelines designed to ensure large projects are financed in socially and environmentally responsible ways. Read More.

Chinese carbon market has 'potential'

17 November 2011 - China Daily, Wei Tian

The carbon market in China has "substantial" potential, and will be decisive to the global carbon price once a national system emerges, Rachel Kyte, Vice-President of the World Bank, said on Wednesday. … Kyte called for more Chinese banks to sign up for the Equator Principles, a set of guidelines that require signatory banks to take into account environmental and social issues when financing development projects.  … "Chinese banks are increasingly global players, and it would be important to see major banks in China adopting a principle that is also globally recognized," Kyte said. Read More.