BANKS DODGY DEALS CAMPAIGNS
About BankTrack
20 years of BankTrack – Our history
Visit us
Organisation
Our team
Our board
Guiding principles
Team up with us
Jobs at BankTrack
Our annual reports
Funding and finances
BankTrack in the media
Our privacy policy
Donate
2023-09-18 00:00:00
New report and blog: Barclays' bond with Adani
2023-08-23 00:00:00
Decarbonization: steel not making the cut
2023-07-27 00:00:00
Two months ago 62 organizations and 3 Goldman Environmental Prize winners wrote an Open Letter to the TNFD: No one responded
2023-07-13 00:00:00
The Sustainable Steel Principles: One step forward when leaps are needed
2023-09-15 17:34:10
The number of major banks refusing to support EACOP reaches 24
2023-07-31 14:30:01
Equator Principles recognise projects’ risk to climate for the first time
2023-05-17 14:30:30
EACOP Financial Advisor SMBC is no longer involved with the project
2023-03-28 13:43:00
French bank Société Générale withdraws from Rio Grande LNG
Connect
2023-09-18 00:00:00
Barclays' bond with Adani
2023-06-26 00:00:00
How should financiers align with the Global Biodiversity Framework? Five Key Principles
2023-04-13 00:00:00
Banking on Climate Chaos 2023
2023-04-12 00:00:00
The East African Crude Oil Pipeline (EACOP): Finance Risk Update No. 4
See all publications
Sections
Banks Dodgy Deals Campaigns
Our campaigns
Banks and Climate
Banks and Human Rights
Banks and Nature
Banks and Pandemics
Our projects
Tracking the NZBA
End Coal Finance
Banks and Putin's war in Ukraine
Banks and steel
Tracking the Equator Principles
Tracking the PRBs
Find a Better Bank
Banks and the OECD Guidelines
Media
News Publications
Fossil Banks No Thanks StopEACOP Forests & Finance Banks & Biodiversity Drop JBS Bank of Coal Don't Buy into Occupation
BankTrack
About BankTrack 20 years of BankTrack – Our history Visit us Organisation Our team Our board Guiding principles Team up with us Jobs at BankTrack Our annual reports Funding and finances BankTrack in the media Our privacy policy Donate
Successes Contact BankTrack
Donate Mailing list Facebook Twitter Login
Home › Partner news ›
Partner News

Equator Principles Re-Launched

Improvements Made, But Principles Fail to Live Up To Their Potential
2006-07-07 | The Netherlands
Contact:

 

2006-07-07 | The Netherlands
Contact:

 

BankTrack welcomes any initiative that enhances the social and environmental sustainability of bank financing operations. BankTrack acknowledges the improvements in the new version of the Equator Principles (EPs), such as the expansion of the Principles to cover financial advising and the lower threshold, but also believes that the EPs fail to live up to their potential.

The Era of Implementation

As the Equator banks have recognized, implementation is critical to the success of the Principles. Since the EP's inception, BankTrack has consistently supported the goal of EP implementation and compliance by encouraging the adoption of robust governance and accountability systems.

Some of BankTrack's feedback, such as the suggestion to regularly review the Principles with an eye toward continuous improvement, was taken on board in the revision and is very much welcome.  (See NGO Comments on the Revision for the Equator Principles).  However, the EP's most fundamental governance and accountability problems still have yet to be adequately addressed
Governance, Implementation and Compliance Systems
EP banks must adopt more robust governance and implementation systems, such as a procedure for dealing with "free riders" and a regular reporting requirement.  At the request of the EP banks, BankTrack produced a simple proposed disclosure framework for the banks on implementation. Although the revised Equator Principles (EP2) now includes new transparency requirements, they fall short of what would be minimally adequate to provide a confident accounting of EP compliance.

Independent Accountability Mechanism

BankTrack further believes that the EP banks should adopt an accountability mechanism that would allow communities affected by projects supposedly governed by the EPs to seek redress for problems they may encounter. BankTrack is disappointed that the EP banks have not taken the opportunity provided by the EP revision to provide for such an accountability mechanism.

The proof is in the portfolio

It has not yet been proven on a generalized basis that the EPs are making a difference to communities on the ground. Today, EP banks still are involved in environmentally and socially harmful projects.  For example, at this time, EP banks represent the majority of financial institutions bidding on the deeply controversial and non-EP compliant Sakhalin II project.  This invites legitimate allegations of 'greenwash' which illustrates the urgent need for EP implementation, compliance and accountability systems.

EPs: A Baseline But Not Best Practice

BankTrack welcomes the areas in which the revised EPs have embraced higher environmental and social standards. For example, as the Equator banks have pointed out, the International Finance Corporation Performance Standards (IFC PS) and therefore the EPs now have stronger standards on labor and working conditions, and a new requirement to covenant clients to host-country environmental and social laws.
However, BankTrack regrets the fact that the Equator banks have chosen to reject certain IFC improvements, and to follow the IFC where it weakened its policies. For example, EP2 did not adopt a new IFC requirement on revenue and contract transparency for extractive industries clients, a measure designed to promote good governance and combat corruption. And on the important issue of Land Acquisition and Involuntary Resettlement, the IFC PS and EP2 actually reverses a previous World Bank policy and no longer recognizes people without 'recognizable' land titles. The EP banks should rectify this.
BankTrack views the EPs as a baseline, rather than best practice, in the field of sustainable financing policies. Banks’ financing standards should uphold international best practices, norms and laws, and EP2 fails to do so in some key areas. For example, human rights are enshrined in international law but are not adequately addressed in the IFC PS and the revised EPs. International law also provides indigenous peoples with the right to give or withhold their Free, Prior and Informed Consent for activities that may affect their traditional territories and resources; but the IFC PS and EP2 does not provide for this.  
A recent BankTrack study found that many banks have already adopted individual environmental and social financing policies that go beyond the Equator Principles. However, the report also found that with few exceptions, these policies are lagging significantly behind international norms, standards and best practices.
For more background on BankTrack's critique of the Equator Principles, click here.

Sections
Banks Policies Dodgy Deals Campaigns
Our campaigns
Banks and Climate Banks and Human Rights Banks and Nature Banks and Pandemics
Our projects
Tracking the NZBA End Coal Finance Banks and Putin's war in Ukraine Banks and steel Tracking the Equator Principles Tracking the PRBs Find a Better Bank Banks and the OECD Guidelines
Media
News Publications
Fossil Banks No Thanks StopEACOP Forests & Finance Banks & Biodiversity Drop JBS Bank of Coal Don't Buy into Occupation
BankTrack
About BankTrack 20 years of BankTrack – Our history Visit us Organisation Our team Our board Guiding principles Team up with us Jobs at BankTrack Our annual reports Funding and finances BankTrack in the media Our privacy policy Donate
Successes Contact BankTrack
Vismarkt 15
6511 VJ Nijmegen
The Netherlands
Contact@banktrack.org
Donate Mailing list Facebook Twitter
©2023 BankTrack
BankTrack is a registered charity in the Netherlands (ANBI) - RSIN 813874658
Find our privacy policy here

Stay up to date

Sign up now for all BankTrack's news


Make a comment

Your comment will be reviewed, before being posted