Distribution Network
Content
Financial institutions that have adopted the voluntary Equator Principles on ethical project financing will now be de-listed if they fail to regularly report on how they are upholding them.
New governance rules which took effect during July state that companies which have adopted the principles but fail to report on them every 12 months will first be given a written reminder of their obligation to do so.
If within three months they have still not reported, then they will be publicly named and sent a final written reminder, with failure to report within a further three months resulting in de-listing.
Institutions that have been de-listed will have the facility to rejoin at some point, but only by re-adopting the principles and starting from scratch.
The new rules are an attempt to toughen up the principles, which were launched in 2003 but have been administered and policed on a largely ad hoc basis since then.
They also set down an administrative structure for the newly created Equator Principles Association, which will be run by an elected steering committee of up to 15 representatives of companies that have adopted the principles. Its first chair is Shawn Miller, global director of environmental and social risk management at Citi bank.
Other institutions represented on the committee include Barclays, BNP Paribas, Credit Suisse, HSBC, Itau Unibanco, Mizuho, RBS and Societe Generale.
The rules, which took two years to draw up, additionally create a new ‘associate’ category for financial institutions that do not undertake project finance but have an interest in the field. Associates will also have to report on how the principles are relevant to them and can be de-listed if they fail to do so.
Miller said the rules had been devised to ‘formalize existing practices and procedures’ and ‘will ensure that [adopters] meet responsibilities such as public reporting’.
The principles have 67 adopters, who have committed not to provide project finance of $10million ($15.6m, €12.2m) or more to customers unable to meet the principles’ social and environmental standards, which are based on the environmental and social policy framework of the World Bank’s private sector arm, the International Finance Corporation.
They were launched in June 2003 by ten initial adopters – including ABN Amro, HVB Group, Rabobank and Westpac – and were revised in 2006. The most recent adopter was Morocco’s BMCE Bank, the first to do so from the North Africa region.
BankTrack, an international NGO network that monitors the principles, welcomed the de-listing rules, but said they would have been more meaningful if reporting requirements had also been made more demanding.
New governance rules which took effect during July state that companies which have adopted the principles but fail to report on them every 12 months will first be given a written reminder of their obligation to do so.
If within three months they have still not reported, then they will be publicly named and sent a final written reminder, with failure to report within a further three months resulting in de-listing.
Institutions that have been de-listed will have the facility to rejoin at some point, but only by re-adopting the principles and starting from scratch.
The new rules are an attempt to toughen up the principles, which were launched in 2003 but have been administered and policed on a largely ad hoc basis since then.
They also set down an administrative structure for the newly created Equator Principles Association, which will be run by an elected steering committee of up to 15 representatives of companies that have adopted the principles. Its first chair is Shawn Miller, global director of environmental and social risk management at Citi bank.
Other institutions represented on the committee include Barclays, BNP Paribas, Credit Suisse, HSBC, Itau Unibanco, Mizuho, RBS and Societe Generale.
The rules, which took two years to draw up, additionally create a new ‘associate’ category for financial institutions that do not undertake project finance but have an interest in the field. Associates will also have to report on how the principles are relevant to them and can be de-listed if they fail to do so.
Miller said the rules had been devised to ‘formalize existing practices and procedures’ and ‘will ensure that [adopters] meet responsibilities such as public reporting’.
The principles have 67 adopters, who have committed not to provide project finance of $10million ($15.6m, €12.2m) or more to customers unable to meet the principles’ social and environmental standards, which are based on the environmental and social policy framework of the World Bank’s private sector arm, the International Finance Corporation.
They were launched in June 2003 by ten initial adopters – including ABN Amro, HVB Group, Rabobank and Westpac – and were revised in 2006. The most recent adopter was Morocco’s BMCE Bank, the first to do so from the North Africa region.
BankTrack, an international NGO network that monitors the principles, welcomed the de-listing rules, but said they would have been more meaningful if reporting requirements had also been made more demanding.
Super Featured
No
Featured
No