sign on form

Stay up to date

Sign up now for all our news
in one monthly digest

New rules for Equator Principles, but no new commitments from banks

New governance rules represent missed chance for Equator Principles to take bold steps forward on transparency and accountability
Main
Banks
By BankTrack | Nijmegen, the Netherlands, Jul 1 2010

The new governance rules for the Equator Principles that are adopted today by the Equator Principles Association may improve the cooperation and decision making amongst Equator Principles financial institutions, but contain no new commitments on transparency and external accountability.[1]

BankTrack -the international NGO network closely monitoring the Equator Principles since their inception in 2003- therefore considers the adoption of this particular set of governance rules a missed chance for EPFIs to take the ‘Bold Steps forward' [2] that civil society expects from them.

The new ‘Rules' formalise a number of existing ad hoc arrangements within the group of financial institutions that have adopted the Equator Principles. They serve as basis for the newly established "Unincorporated Association of Equator Principles Financial Institutions and Associates" (‘the Association'). The Association claims that the Rules bring a number of improvements to the workings of the Equator Principles:

1.        Greater clarity on annual public reporting requirements

BankTrack considers the current reporting ‘requirements' [3] deeply unsatisfactory in the light of what affected communities and the public should be able to learn about the implementation of the Principles in concrete transactions. The new Rules contain no change in these requirements, and the claimed transparency increase remains far below what may be expected from institutions that make a public commitment towards sustainability, yet refuse to share with the public how they intend to achieve this.

Adopting banks should move beyond the current meager requirements of merely listing the number of transactions per category and providing a few lines on implementation, and commit themselves to much higher levels of transparency and information disclosure, right down to the project level.[4]

2.           Introduction of an ‘Associate' category for financial institutions who do not undertake project finance, but may want to use the EPs as a source of good practice and knowledge for other transaction types beyond project finance.

BankTrack welcomes any step that leads to the expansion of the scope of the Equator Principles beyond project finance, covering all transaction with a potential negative impact on people and planet. But such a scope expansion must be a binding commitment, incorporated in the Principles itself, and not left to the good intentions of individual adopting banks, let alone associates.

BankTrack fears that by creating the new category of ‘Associates', institutions that are ‘interested in discussing sustainability issues', the Equator Principles run a severe risk to turn into the ‘Equator Flexibles'; a sustainability bazaar where every bank can pick what it suits them, rather than the ambitious standard setting initiative that the Principles should aim to be.

3.        A newly introduced process for delisting non-compliant institutions

BankTrack welcomes the introduction of criteria to enlist and delist mal performing banks from the Equator Principles. It is disappointing that the Association has decided to choose ‘meeting extremely limited reporting requirements' and ‘dutifully paying the membership fee' as the only two criteria for such a decision.

To effectively deal with the reputational risk of ‘free riders', a decision on delisting (as well as enlisting) should include a thorough assessment of the implementation of the Principles in concrete transactions and a convincing roll out within the institution itself (capacity, staff, procedures). This requires stronger peer review procedures and a formally established channel through which grievances of communities affected by projects financed ‘under Equator' can reach the Association and may trigger such a review.[5]

4.        Greater transparency in the management of the Equator Principles Association

This may well be the best result of the new structure; for too long, progress with the Principles has been paralyzed by the lack of an effective decision making structure for the EPFI group. The new structure paves the way for bold steps forward on pressing matters related to transparency, accountability, scope extension and dealing with risks associated with human rights and climate change. The upcoming revision of the Equator Principles in 2011 provides the next opportunity for dealing with these issues.

"We congratulate the EPFIs on adopting the new governance rules. They will hopefully allow the EPFIs to further develop the initiative" said Michelle Chan, private finance coordinator of Friends of the Earth US, "At the same time it is deeply disappointing that a two year drafting process leads to such a mundane outcome. When reading the rules it is clear that the liability concerns of bank lawyers have clearly prevailed over the urgent need to open up to the public and to project affected communities."

"Rather than diluting the Equator Principles, by adding a new category of vague ‘associates', EPFIs should strive to create a bold ‘Coalition of the Willing', a cohort of banks ready to make a substantial sustainability commitment, instead of just having interesting conversations about it with fellow banks," says Johan Frijns, coordinator of BankTrack: "To rescue the reputation of the Equator Principles as an initiative that matters, EPFIs should display ambition and be ready to incorporate new commitments on transparency and accountability in the next revised version of the Principles in 2011.

-------------------------------------------

Notes

[1] For the new rules and more information on the Equator Principles see here. For BankTrack opinion on the principles -including background documents and correspondence with banks see here.

[2] In January 2010, BankTrack submitted a letter to the EPFIs, signed by over hundred civil society organisations, calling for ‘bold steps forward' with the Principles on transparency, accountability, scope extension and climate change. See here.

[3] Equator Principle 10 states:

Each EPFI adopting the Equator Principles commits to report publicly at least annually about its Equator Principles implementation processes and experience, taking into account appropriate confidentiality considerations. Such reporting should at a minimum include the number of transactions screened by each EPFI, including the categorisation accorded to transactions (and may include a breakdown by sector or region), and information regarding implementation.

For the reporting requirements of adopting banks see here.

[4] The Bold Steps Forward document calls upon EPFIs to:

  • list the names of all projects that are being financed ‘under equator' on EPFIs website or on the official Equator website. Every deal signed under the Principles should be publicly identified as being governed by the Principles;
  • covenant with project sponsors that all projects financed ‘under Equator' are publicly identified as such on the project sponsors website, and that client confidentiality be limited to information directly related to the project sponsor itself.
  • identify a minimum level of project information disclosure that all project sponsors must abide to, that should include all documents relevant for affected communities and other stakeholders to engage in consultation and monitoring processes; demand active dissemination of this information amongst all stakeholders
  • come up with a stringent set of reporting obligations for adopting banks that include public targets for implementation.
  • introduce mandatory external, third party verification of compliance with these reporting guidelines
  • exclude all banks from the Principles that do not meet these requirements.

[5] The Bold Steps Forward document calls upon EPFIs to establish an accountability/compliance/ombudsman mechanism for the Principles, along the lines of similar mechanisms that are in place with multilateral development banks but suited to the specific needs of private sector banks.

 

contact

  • Netherlands: Johan Frijns, coordinator BankTrack, coord@banktrack.org, M: 31-6-12421667, T: 31-24-3249220
  • San Francisco, United States: Michelle Chan, Program Director, Green Investments Friends of the Earth US +1 415 5440790 x214
  • Sao Paulo, Brazil; Roland Widmer, Coordenador do Programa Eco-Finanças Amigos da Terra - Amazônia Brasileira, +55 11 38879369
  • Zürich, Switzerland, Andreas Missbach, Berne Declaration, +41 44 2777007
  • Madrid, Spain, Annie Yumi Joh, Responsable de Campañas, SETEM, +34 915499128
  • Paris, France, Yann Louvel Campaigner private finance, Les Amis de la Terre , +33 1 48511892

 



Absa Bank Limited
Absa Bank Limited was founded in 1991 in Johannesburg South Africa. Until 2013 it was a wholly owned subsidiary of Absa Group Limited. On July 31st 2013 Absa Group Limited…
ANZ
The Australia and New Zealand Banking Group Limited commonly called ANZ, is the fourth largest bank in Australia, after the Commonwealth Bank,…
Arab African International Bank
The first Arab multinational bank, Arab African International Bank (AAIB), is a joint venture between the Central Bank of Egypt and the Kuwait Investment Authority, incorporated…
ASN Bank
ASN is an independently operating bank that is part of the SNS Bank N.V. It was founded in 1960. ASN aims to be a leading bank in sustainable banking in the Netherlands,…
Banco Bradesco
Banco Bradesco was established in 1943 and is one of Brazil's largest private-sector bank in Brazil and Latin-America. Its consolidated assets have a worth…
Banco do Brasil
Banco do Brasil is partly state-owned, partly publicly listed at the stock exchange in Sao Paulo. Banco do Brasil was founded by then prince-regent João VI of…
Banco Espirito Santo
Banco Espirito Santo (BES) was a Portugal-based commercial bank.    On August 3, 2014 as a result of the financial crisis Banco Espírito Santo received a…
Banco Galicia
Founded in 1905, Banco Galicia is one of the largest private sector banks in the Argentine financial system and a leading financial services provider in the country. As a…
Bancolombia S.A.
Bancolombia is the largest commercial bank in Colombia and one of the largest in Latin America, providing a range of financial products and services to both individual and…
Bank of America
Bank of America is an American multinational banking and financial services corporation and is the second largest bank holding company in the United States by assets, and…
Bank of Tokyo-Mitsubishi UFG
Bank of Tokyo - Mitsubishi UFJ is the largest bank in Japan. It was established on January 1, 2006, with the merger of the Bank of Tokyo-Mitsubishi, Ltd. and UFJ Bank Ltd.…
Barclays
Barclays is a major global financial services provider engaged in retail and commercial banking, credit cards, investment banking, wealth management and investment management…
BBVA
Banco Bilbao Vizcaya Argentaria (BBVA), is a multinational Spanish banking group. It was formed in 1999 from a merger of Banco Bilbao Vizcaya and Argentaria. It provides financial…
Belfius
At the end of 2011 the former Dexia Group (France/Belgium/Luxembourg) went through a major restructuring. The state of Belgium became the owner of the Dexia Bank Belgium.…
BMCE Bank
In 1959 BMCE was founded by the Maroccan government as a public bank. It was the first Maroccan bank to establish a presence outside of Marocco in 1975. The privatisation…
BMO
Established in 1817 as Bank of Montreal, BMO Financial Group is a highly diversified financial services provider based in North America with total assets of $699 billion…
BNP Paribas
BNP Paribas is one of the main banks in Europe. It was created on 23 May 2000 through the merger of Banque Nationale de Paris (BNP) and Paribas.…
Caixa Economica Federal
With about 38 million customers, the government-owned company is Brazil's second largest bank by assets and the largest publicly held bank in Latin America. The bank was…
CIBC
The Canadian Imperial Bank of Commerce (CIBC) formed after the largest merger of two chartered banks in Canadian history on June 1961, the merger between Canadian Bank of…
Citi
Citigroup Inc., doing business as Citi, is a major American financial services company based in New York, NY. Citigroup was formed from a merger between Citicorp and financial…
Crédit Agricole
The Crédit Agricole Group is a unified but decentralised group consisting of 39 Regional Banks, Crédit Agricole S.A. and many subsidiaries. It includes Crédit…
Credit Suisse
Credit Suisse Group was founded in 1856 and is headquartered in Zurich, Switzerland. It serves companies, institutional clients and high-net-worth private clients worldwide,…
DnB
DnB, founded in 1822, is Norway’s largest financial services group. The Group consists of brands such as DnB, Vital, Nordlandsbanken, Cresco, Postbanken, DnB NORD and…
FirstRand
FirstRand Limited, also referred to as FirstRand Group, is established on April 1, 1998. FirstRand is a fully integrated financial services group and one of the big four…
FMO
FMO is the Dutch development bank supporting companies, projects and financial institutions from developing and emerging markets. It specialises in sectors where…
HSBC
Headquartered in London, HSBC is one of the largest banking and financial services organisations in the world. HSBC operates from around 6,100 offices in 72 countries and…
Industrial Bank
The Industrial Bank was founded in 1988 and was one of the first batch of joint-stock commercial banks approved by the State Council and the People's Bank of China. The Industrial…
ING
ING (an abbreviation of Internationale Nederlanden Groep) is a Netherlands based international financial services company and one of the world's largest savings banks. ING…
Intesa Sanpaolo
Intesa Sanpaolo is a banking group resulting from the merger at January 1, 2007 between Banca Intesa and Sanpaolo IMI. It has a strong international presence focused on Central-Eastern…
Itaú Corpbanca
Founded in 1871 as Banco de Concepción, CorpBanca is the oldest existing bank in Chile. The bank's main focus was on the local market before. Now, CorpBanca has shifted…
Itaú-Unibanco
Banco Itau took over Unibanco on November 3 2008, to form Itaú Unibanco Holding S.A. Itaú Unibanco is a publicly-held company which, together with…
JPMorgan Chase
JPMorgan Chase is one of the Big Four Banks of the United States (along with Bank of America, Citigroup and Wells Fargo). The firm was formed in…
KfW IPEX-Bank
KFW IPEX-Bank is a subsidiary of the KfW banking group, and it is responsible for international project- and export finance. The bank competes directly with commercial banks,…
Mizuho Financial Group
Mizuho Financial Group is one of three Japanese "megabanks" (along with Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group). The name "Mizuho" is an…
NAB
The National Australia Bank Group is one of the four biggest banks of Australia. It was founded in 1982 as the National Commercial Banking Corporation of Australia Limited.…
Nedbank
Nedbank Group Limited (‘Nedbank Group’) is a bank holding company that operates as one of the four largest banking groups in South Africa, with Nedbank Limited…
Nordea
The Nordea Group was established in 2000 but derives its origin from banks and insurance companies from the Nordic region from the early 19th century. Since 3 December…
Rabobank
Rabobank Group is a full-range financial services provider based in the Netherlands. It is founded on cooperative principles and as such owned by its members. The bank offers…
RBC
The Royal Bank of Canada (in French, Banque Royale du Canada, and commonly RBC in either language) is the largest financial institution in…
RBS
RBS was founded in 1727 and is one of the major UK banks. RBS has 40 million customers using the financial services of over 30 brands, including NatWest, Direct Line, Churchill,…
Santander
Banco Santandar S.A., founded in 1857 in Santander, Spain. The group has expanded since 2000 through a number of acquisitions, with operations across Europe, Latin America,…
Scotiabank
The Bank of Nova Scotia (commonly called Scotiabank in English and Banque Scotia in French) is the third largest bank in Canada by…
SEB
Skandinaviska Enskilda Banken AB (SEB) is a Swedish bank focussed on corporate and private banking. It describes itself as the leading corporate and investment bank in the…
Société Générale
Société Générale ("SocGen") is one of the oldest banks in France, dating back to 1864. The original name was Société…
Standard Bank
Standard Bank is a South African-based financial services group with a global presence focused on emerging markets. It operates in 30 countries around the world, including…
Standard Chartered
Despite its British base, Standard Chartered has few customers in the United Kingdom. Ninety percent of its profits come from Asia, Africa, and the Middle East. Its operations…
Sumitomo Mitsui Banking Corporation
Sumitomo Mitsui Banking Corporation (SMBC) was established in April 2001 through the merger of two leading banks: the Sakura Bank Limited, and the Sumitomo Bank Limited.…
Toronto-Dominion Bank - TD
The Toronto-Dominion Bank (in French, Banque Toronto-Dominion, and commonly TD in either language) is a multinational banking and financial services corporation,…
UniCredit
The UniCredit Group is the result of the merger of nine of Italy's largest banks and the subsequent combination with the German HVB Group and the Italian Capitalia Group.…
Wells Fargo
Wells Fargo is one of the big banks in the United States, located in San Fransisco. In october 2008, Wells Fargo acquired the troubled bank Wachovia, at that moment the sixth…
Westpac
Westpac is an Australian bank with a strategic focus on Australia, New Zealand and the near Pacific. The Westpac Group provides a broad range of banking and financial services,…
Login

Good login. Redirecting to
'My Banktrack'.
Wrong login. Click here to request your password.
An email has been sent with your login!
Request password
This email is unknown.
<< Back
Search
Please provide one or more search terms

Join our mailinglist

Get all our latest news releases delivered straight to your inbox - or get our News Digest once a month

banktrack tweets
The UN’s climate fund is failing to invest in those most in need: https://t.co/XZQj2hafIZ
Sep 28, 2016
RT @ConversationUK: New coal plant threatens the world's largest mangrove forest, home to endangered tigers and dolphins https://t.co/9Stl
Sep 28, 2016
contact
route
Vismarkt 15
6511 VJ Nijmegen
Netherlands


contact@banktrack.org
Contact us