BankTrack, the international NGO network monitoring commercial bank operations, today welcomes the take over by Citi of the chair of the steering committee of the Equator Principles. We congratulate Mr. Shawn Miller for taking up this prestigious role on behalf of Citi.

At the same time, BankTrack calls upon the new chair to no longer resort to empty slogans and hollow promises and to get to work on improving the performance of the Equator Principles on a number of urgent issues that, if left unsolved, threaten the very credibility of the Equator Principles as a sustainability initiative that delivers.

Last month, prior to the annual engagement with the Equator Principles Financial Institutions (EPFIs) in Zürich, Switzerland, BankTrack published an open letter signed by over a hundred civil society organizations, demanding ‘bold steps forward' with the Equator Principles.[3] Specifically, the letter called upon the EPFIs to:

1. Open up, by improving the transparency of the Principles through full disclosure of banks' implementation efforts, on the project level, disclosure of all information related to a project's social and environmental impact.
2. Be accountable, by improving the community consultation process, establishing guidelines for project grievance mechanisms, and establishing an accountability mechanism for the Principles themselves.
3. Expand the scope, by committing to apply the Principles, or an adapted version thereof, beyond project finance transactions to general corporate loans, asset management activities and Initial Public Offerings (IPOs).
4. Stop financing climate change, by developing exclusion criteria for projects and activities with a high impact on climate change, such as fossil fuel exploration projects and coal power plants, and by developing stringent climate targets for other projects financed ‘under Equator'.

As the EPFIs, during the meeting in Zürich failed to seriously respond to the extensive proposals of civil society contained in the letter, BankTrack felt obliged to end the seven year engagement process with the Equator Principles banks. Talks will be resumed only after EPFIs publicly disclose what steps they intend to make on the issues listed above. [4]

"Citi may look forward to partnering with the EPFI colleagues", says Michelle Chan, Program Director, Green Investments Friends of the Earth US, referring to the announcement made by Citi, "but the people to start partnering with are first and foremost communities affected by projects financed ‘under Equator'. After seven years, their voice continues to be largely ignored by the EPFIs"

"The new chair begins his term by saying that ‘the Equator Principles enormous success in what is relatively a short-period of time is truly remarkable' [1], says Johan Frijns, BankTrack's international coordinator, "but in fact there is almost no independently verifiable evidence coming from banks that the Principles indeed make a positive difference for project affected communities, or help preserve the environment. In contrast, we are aware of numerous serious problems with projects that are ‘under Equator'. [2] It is precisely this self-congratulatory attitude, combined with a continuous lack of transparency and accountability that may eventually defeat the Equator Principles initiative".

Background

[1] Press release Citi, February 23 2010, see http://www.equator-principles.com/

[2] For examples of such projects see the ‘dodgy deals section at http://www.banktrack.org

[3] See here

[4] For a comprehensive overview of this seven year process look here