: Magazine : Back
Issues : July/Aug 2003 : Special
Section : The Equator Principles
The Equator Principles
Project financing plays an important role in financing development
throughout the world. In providing financing, particularly in emerging
markets, project financiers often encounter environmental and social
policy issues. We recognize that our role as financiers affords
us significant opportunities to promote responsible
environmental stewardship and socially responsible development.
In adopting these principles, we seek to ensure that the projects we finance
are developed in a manner that is socially responsible and reflect sound environmental
management practices. We believe that adoption of and adherence to these principles
offers significant benefits to ourselves, our customers and other stakeholders.
These principles will foster our ability to document and manage our risk exposures
to environmental and social matters associated with the projects we finance,
thereby allowing us to engage proactively with our
stakeholders on environmental and social policy issues. Adherence
to these principles will allow us to work with our customers in their management
of environmental and social policy issues relating to
their investments in the emerging markets.
These principles are intended to serve as a common baseline
and framework for the implementation of our individual, internal
environmental and social procedures and standards for our project financing activities
across all industry sectors globally.
In adopting these principles, we undertake to review carefully all
proposals for which our customers request project financing. We will not provide
loans directly to projects where the borrower will not or is unable to comply
with our environmental and social policies and processes.
Statement of Principles
We will only provide loans directly to projects in the following
1. We have categorized the risk of a project in accordance with
internal guidelines based upon the environmental and social screening
of the IFC as described
in the attachment to these Principles.
2. For all Category A and Category B projects, the borrower has completed an
Environmental Assessment (EA), the preparation of which is consistent with
the outcome of our categorization
process and addresses to our satisfaction key environmental and social issues
identified during the categorization process.
3. In the context of the business of the project, as applicable, the EA report
- assessment of the baseline environmental and social
- requirements under host country laws and regulations,
applicable international treaties and agreements;
- sustainable development and use of renewable natural resources;
- protection of human health, cultural properties and biodiversity,
including endangered species and sensitive ecosystems;
- use of dangerous substances;
- major hazards;
- occupational health and safety;
- fire prevention and life safety;
- socioeconomic impacts;
- land acquisition and land use;
- involuntary resettlement;
- impacts on indigenous peoples and communities;
- cumulative impacts of existing projects, the proposed project,
and anticipated future projects;
- participation of affected parties in the design,
review and implementation of the project;
- consideration of feasible environmentally
and socially prefer-able alternatives;
- efficient production, delivery and use
- pollution prevention and waste minimization,
pollution controls (liquid effluents
and air emissions) and
solid and chemical
Note: In each case, the EA will have addressed compliance with
applicable host country laws, regulations and permits required by the project.
Also, reference will have been made to the minimum standards applicable
under the World Bank and IFC Pollution Prevention and Abatement
for projects located in low- and middle-income countries as defined by
Bank Development Indicators Database, the EA will have further taken into
account the then applicable IFC Safeguard Policies. In each case, the EA
addressed, to our satisfaction, the project’s overall compliance with (or justified
deviations from) the respective above-referenced Guidelines and Safeguard Policies.
4. For all Category A projects, and as considered appropriate for Category
B projects, the borrower or third party expert has
prepared an Environmental Management Plan (EMP) which draws on the conclusions
of the EA. The EMP has addressed mitigation, action plans, monitoring,
management of risk and schedules.
5. For all Category A projects and, as considered appropriate for Category
B projects, we are satisfied that the borrower or third party expert has
consulted, in a structured and culturally
appropriate way, with project affected groups, including
indigenous peoples and local NGOs. The EA, or a summary thereof, has been
made available to the public for a reasonable minimum period in local language
in a culturally appropriate manner. The EA and the EMP will take account
consultations, and for Category A Projects, will be subject to independent
6. The borrower has covenanted to:
- comply with the EMP in the construction and operation of the project;
- provide regular reports, prepared by in-house staff or third
party experts, on compliance with the EMP; and
- where applicable, decommission the facilities in accordance
with an agreed Decommissioning Plan.
7. As necessary, lenders have appointed an independent
environmental expert to provide additional monitoring and reporting
8. In circumstances where a borrower is not in compliance with its
environmental and social covenants, such that any debt financing would
be in default,
we will engage the borrower in its efforts to seek solutions to bring
with its covenants.
9. These principles apply to projects with a total capital cost of
$50 million or more. The adopting institutions view these principles
developing individual, internal practices and policies. As with all
internal policies, these
principles do not
create any rights in, or liability to, any person, public or private.
Banks are adopting and implementing these principles voluntarily and
reliance on or recourse to IFC or the World Bank.
Collevecchio Declaration on Financial
Institutions and Sustainability