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Equator Principles III better be good
Launch new Equator Principles again postponed; expectations rise on what new Principles will deliver
Nijmegen, Mar 29 2012
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” (1)
Despite assurances from the association that it “will aim to be open and transparent during the EP III Update process” and “[ ] welcome feedback and comments from any interested party on both process and substance” until now no draft document of the Principles has ever been shared with civil society stakeholders.
If EPIII is indeed launched end of October 2012 it will have taken the Association a staggering two full years since the start of the strategic review process (2) to revise a six page document that provides adopting banks with ‘a credit risk management framework for determining, assessing and managing environmental and social risk in project finance transactions’.
The fact that it takes Association members an additional 6 months (compared to original schedule) to reach an agreement on the draft text fuels fears that little can still be changed once that text is released for the 60 day Stakeholder Consultation and Public Comment Process.
It better be good!
According to BankTrack, the review process need not take that long, but if it does the outcome better be good. At our meeting in October 2011 in Washington DC we provided the Association with a detailed list of issues that need to be adequately dealt with in the new EPIII if the Principles are to remain relevant for banks seeking a sustainable way forward with their business operations. (3)
The paper ’The Outside Job’ seeks commitments from the Association on:
Transparency: EPIII can only deliver if affected communities have full and timely access to all relevant documents and information about the project, including information on which banks are financing the project, and if the proper implementation of EPs on project level can be independently verified by external stakeholders
Accountability: banks adopting EPIII must commit to publicly report on their implementation of the principles on project level and allow themselves to be challenged on this through appropriate channels.
Scope extension: EPIII must be a risk management tool not only for project finance transactions but for the financing of all projects, including corporate loans and other financing arrangements.
Climate change: a risk management tool that does not contain credible commitments to stop financing projects that massively contribute to climate change, being the biggest risk faced by everyone on the planet, banks included, is not worth its name; next to obligations to project sponsors to identify less GHG alternatives for all proposed projects, we expect a categorical exclusion of the financing of climate destructive projects as coal mining, coal power plants and oil exploration projects –especially tar sand operations-. The risks posed by these projects cannot be mitigated.
Human rights: EPIII must ensure that adopting banks comply with their obligations to respect human rights, as outlined in the ‘Protect, Respect and Remedy’ framework, and ensure that arrangements are in place to respect human rights on project level. EPIII must require proper human rights due diligence procedures for banks and conduct of human rights impact assessments by sponsors where necessary.
Johan Frijns, Director of BankTrack commented “After two years of deliberations, expectations on the outcome of the update process have soared; the new Equator Principles must be a major step forward on all the issues listed in our ‘Outside Job’ paper. If EPIII closely resembles EPII the Association may as well dissolve itself as yet another toothless debating club”
Johan Frijns, Driector BankTrack Johan@banktrack.org +31 6 email@example.com
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