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A banking industry initiative on social and environmental risks in project finance should become more transparent and expand its scope, according to campaigners.
Financial institutions that have signed up to the Equator Principles (EPs) - a credit risk management framework for determining, assessing and managing environmental and social risk in project finance transactions - are meeting in Washington, DC this week to discuss a third update to the EPs.
BankTrack, a global network of NGOs that monitors private banks, said the EPs have become an "inward-looking initiative" and that they should move from being primarily a risk management tool to a set of commitments that also make a substantial difference to people and the environment.
In a report published this week, the NGO group is calling for improved transparency and accountability, expansion to other areas of bank activity, and better handling of banking impacts on climate change and human rights. It also urged EP banks to not hide behind "excessive interpretations of client confidentiality".
Johan Frijns, BankTrack's Netherlands-based coordinator, said: "This overhaul and redirection of the Equator Principles is already long overdue, but the Equator Association now has a real opportunity to deliver on their ‘outside job'. While they are at it, they can also restore some of the trust that the public has lost in the banking sector after the financial crisis."
A total of 73 financial institutions have adopted the Equator Principles, including BNP Paribas, Barclays, HSBC and Sumitomo Mitsui Banking Corp.