BankTrack comments on draft Equator Principles III

BankTrack, the international NGO network monitoring investment decisions and sustainability commitments of large international banks, today submitted its comments on the Equator Principles III draft text (EPIII) [1]. The submission followed a meeting in London on September 25 where BankTrack shared its view on EPIII with the Equator Principles Association (Association) [3]

Following earlier BankTrack reports [2], this new submission assesses the draft EPIII text on whether it adequately deals with five major issues left unresolved in EPII:

1. Increase the transparency of the workings of the Principles and the Association
2. Increase the accountability of the Principles and adopting banks towards stakeholders and affected communities
3. Extend the scope of the Principles
4. Adequately deal with climate change
5. Adequately deal with human rights obligations of banks

Overall, BankTrack considers EPIII an improvement over EPII, notably in the extension of the scope of the Principles and the commitment of EPFIs to post more project level information on their website.

Yet, the detailed assessment leads BankTrack to conclude that bigger steps must be taken by the Association if the new Equator Principles are to become a leading initiative on sustainable finance. The Association seems prepared to only take tiny, over cautious steps ahead where bold moves are required, thus risking to be overrun by the very developments and risks the Equator Principles are supposed to manage.

The absence of any meaningful commitment on tackling climate change is a case in point. The EPFIs are to a substantial extent deepening the climate crisis by continuing to invest in ever more oil, gas, coal extraction, and coal power projects. This will not be mitigated by merely requiring borrowers to ‘assess less GHG intensive alternatives and consider them when financially feasible' and ‘report on GHG emission levels'. BankTrack expects the new Equator Principles to include mandatory requirements on borrrowers that will lead to a substantial reduction of the overall climate impact of all projects financed under Equator.

Yann Louvel, BankTrack's climate and energy campaign coordinator, comments: "It is astonishing and disappointing that the Equator Principles banks, while claiming to adhere to the gold standard for managing environmental and social risk by banks, continue to turn a blind eye to the severe risk they pose on the planet and on themselves by financing projects that exacerbate and accelerate climate change such as tar sands, coal fired power plants or Arctic drilling."

Johan Frijns, BankTrack Director, comments: "it took seven years since EPII, and fifteen months of talking by the Equator banks to produce this draft, yet there is a real risk that EPIII will not be the commitment we need from banks to take up their responsibilities towards stakeholders, impacted communities and the planet. We simply expect more of EPIII."

Further information:

[1] See: http://www.banktrack.org/download/tiny_steps_forward_on_the_outside_job/121010_tiny_steps_forward_bt_comments_on_epiii_final.pdf

[2] See the document section here: http://www.banktrack.org/show/pages/equator_principles

[3] See http://www.equator-principles.com/index.php/ep3