Equator Principles

The Equator Principles serve as a benchmark for participating financial institutions (Equator Principles Financial Institutions or EPFIs) for the identification, assessment, and management of environmental and social risks when financing projects. EPFIs committed to providing project finance advisory services, project finance, project-related corporate loans, bridge loans, project-related refinancing or project-related acquisition finance to projects that comply with the relevant Equator Principles requirements. The Equator Principles stated include: (1) Review and Categorization wherein projects are classified according to any adverse impact to the environment and social risks, (2) Environmental and Social Assessment, requiring the client of an EPFI to conduct an appropriate assessment process to address the relevant environmental and social risks, (3) Applicable Environmental and Social Standards pursuant to which, the assessment process should address compliance with relevant host country laws and regulations on environmental and social issues; (4) Environmental and Social Management System (ESMS) and Equator Principles Action Plan where, for projects with potential adverse environmental impact or social risks, an EPFI client must develop and maintain and ESMS, (5) Stakeholder Engagement, for projects that have potential adverse environmental impact or social risks, EPFI clients must be able to demonstrate effective engagement with affected communities, workers and other stakeholders, (6) Grievance Mechanism, similarly for projects with potential environmental or social risks, for effective mechanisms to be designed for affected communities and workers, (7) Independent Review to assist the EPFI’s due diligence and determination of Equator Principles compliance, (8) Covenants linked to compliance in financial documentation with the EPFI client, (9) Independent Monitoring and Reporting by an Independent Environmental and Social Consultant, and (10) Reporting and Transparency, with reporting requirements for both the client and EPFI.