Equator principles (financial) — EP-III released
On 14 May 2013, the Equator Principles Association announced the adoption of the revised Equator Principles (EP-III), which will take effect from 4 June 2013. If you are a financial institution that has adopted the Equator Principles (an EPFI) or a project sponsor that will be seeking finance for a project after 4 June 2013, you should be aware of the changes introduced by EP-III so that steps can be taken to integrate these requirements into existing environmental and social impact assessment and management systems at an early stage — avoiding delays in the financing process.
The Equator Principles are a set of voluntary principles adopted by commercial, financial institutions for the management of environmental and social risks in project finance transactions. By adopting the Equator Principles, EPFIs commit to only finance projects that meet certain requirements. Broadly EPFIs must ensure that clients have established management systems relating to the environmental and social impacts of a project including conducting environmental and social impact assessments, developing an environmental and social management plan, identifying actions to bring the project into compliance with applicable law and, where the project is hosted in a non-OECD country, the International Finance Corporation Performance Standards, and reporting on the implementation of this environmental and social assessment. There are also requirements to consult with stakeholders affected by the project and to establish grievance mechanisms to resolve disputes about the project’s impact. Finally, the Equator Principles require that covenants on these matters are included in financing agreements…
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