Rachael Bailey discusses how to manage environmental and social risk in project finance

Applying the Equator Principles can dramatically improve the environmental and social risk profile of project financings. But their application can often be improved. Extract from the Article by Rachael Bailey and colleagues:

In the three years since their introduction, the Equator Principles have driven substantial environmental and social performance improvements in project finance. These voluntary guidelines, which essentially involve private sector banks committing to apply World Bank/International Finance Corporation (IFC) social and environmental risk management procedures to projects which they finance, have been adopted by institutions accounting for more than 80% of project finance flows.

There is now widespread awareness of the benefits of using the appropriate expertise at the outset to manage potential environmental and social risks throughout the project cycle, and thereby secure better financial terms at financial close and syndication. Ensuring that environmental and social risks are fully under control now plays a key part in securing confidence in project finance deals.

The full article can be viewed on the Equator Principles Website or the Environmental Finance website.

A copy of this article is available here for downloading. ef7equator_bailey_p28-30-v2.pdf

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