Global Vantage: Will the post-Coronavirus world be more accepting of the Equator principles?

Infrastructure projects are often criticised for their impact on the natural environment and local communities.

To address these concerns and to support responsible decision-making, the Equator Principles (EPs) provide financial institutions with a risk management framework for determining, assessing and managing the environmental and social risk of projects.

Organisations that choose to adopt the EPs are known as Equator Principles Financial Institutions (EPFIs) and, to date, 104 EPFIs in 38 countries have officially adopted the EPs. This covers the majority of international project finance debt within both developed and emerging markets.

An updated edition of the EPs, “EP4”, was adopted by the Equator Principles Association (EPA) on 18 November 2019. This was the result of a process involving extensive dialogue with a wide variety of stakeholders. Amendments include extending the scope of the EPs to capture more Project-related transactions and new commitments in relation to climate change and biodiversity. The world is changing dramatically at the moment so we may say greater appetite for these principles.

For developers, compliance with the EPs can represent a significant hurdle. However, if utilised properly the EPs and similar CSR initiatives can be vital in helping to strengthen the ties between a business and the wider community, including outside investors.

For further information on anything covered in this publication, please contact Antony Smith.