Faced with mounting pressure from protest groups, 10 of the world's leading banks have agreed to adhere to international environmental and social-impact standards when financing dams, power plants, pipelines and other infrastructure projects.

Citigroup Inc., ABN Amro Bank N.V., WestLB AG, Barclays PLC, Credit Suisse First Boston and five other banks plan to announce Wednesday that they'll embrace strict - but voluntary - standards developed by the World Bank's International Finance Corp. to prevent massive construction efforts from poisoning the air and water, denuding forests, and destroying the livelihoods of locals who get in the way. While the banks say the standards will apply all over the world, they are aimed mainly at projects in developing nations, where government regulators are often ill-equipped, or unwilling, to mitigate the potential side-effects of such foreign-backed initiatives.

The banks "believe this will lead to more secure investments on the part of our customers and safer loans on the part of the banks," said Chris Beale, head of Citigroup's global project-finance business. "Because if you finance something that's dirty or something that harms people, there's a likelihood that the host government or local people will interfere with it or even take it away from you."

Several more large banks are expected sign up in the coming weeks, and supporters believe the guidelines, dubbed the "Equator Principles," will become the industry standard within a couple years. The participating banks provided some $9.12 billion in loans for infrastructure projects last year, according to Dealogic, a London-based data provider. The reach of the banks' decision is likely to exceed their direct loans because they generally organize syndicates involving several lenders.

But they are also among the biggest targets for environmental and social activists who argue their loans have sometimes contributed to the contamination and impoverishment of the developing world. One participating bank, Germany's WestLB, for instance, is in a running dispute with environmentalists over an oil pipeline project in Ecuador.

Citigroup, which also supports the Ecuador project with a letter of credit, is an even-more frequent target of activists. The Rainforest Action Network, a San Francisco-based environmental group, initiated a campaign against Citigroup about three years ago, blaming the bank for rainforest destruction, climate change, and the disruption of the lives of indigenous peoples, said Ilyse Hogue, the global finance campaign director.

The not-for-profit group has persuaded supporters to cut up their Citigroup credit cards and mail them back to the company, and pressured college students not to sign up for the cards at all. Last winter, it even hung a large banner across from Citigroup's headquarters accusing it of "banking on" global warming and forest destruction. Citigroup opened a dialogue with the group prior to its 2003 annual meeting, where Rainforest Action Network was scheduled to introduce shareholder proposals related to environmental policies.

"We're glad to see banks responding to pressure that's been brought on them," said Ms. Hogue. "But I think that you'll find broad consensus around the NGO [nongovernmental organization] community that the Equator Principles don't go far enough. The loopholes are wide open enough for bulldozers to move through." Ms. Hogue criticized the initiative for not setting up "no-go zones" for highly endangered regions and for lacking a monitoring and enforcement mechanism, among other things.

Other activists applauded the banks' decision, but wondered aloud how diligently it will be implemented. They noted that there is no enforcement mechanism forcing the banks to comply, other than the public pressure that comes with a public promise. "There's a big question about how are they going to ensure this isn't just public relations, that this is really carried out effectively in these big project-finance operations they've been involved in," said Bruce Rich, director of international programs at Environmental Defense, a U.S. advocacy and research organization.

For their part, the banks are betting the standards will become the industry norm, making it easier for them to keep their promises without fear of losing customers to competitors willing to finance projects the signatories now might avoid.

"Those banks who are seriously interested in project finance and long-term lending to emerging markets will clearly adopt these principles over the medium term," said Peter Woicke, head of the IFC, which, as a public institution, came under pressure to meet higher standards even before the commercial banks did.

Under the new guidelines, projects are grouped into categories according to the environmental and social risks they entail. Some require no special consideration. Some simply require engineers to minimize pollution output. But before they lend for the riskiest projects - say, a major dam or open-pit mine - banks would require environmental impact assessments, public consultations and increased transparency from the borrower.

At least some of the signatories were reluctant to portray their participation as a concession that their current practices had hurt the environment or local citizens. "The whole area of project financing has received a lot of attention over the past couple of years from the media and from pressure groups," said a spokeswoman for Barclays. The new initiatives, she said, "don't change things for Barclays. It just externally acknowledges what we're already doing."