Incorporating Environmental and Social considerations into Loan Documentation – New Guidance for Equator Principles Financial Institutions

A new guidance document ‘Guidance on incorporating environmental and social considerations into project finance loan documentation” has been released which can be expected to provide Equator Principles Financial Institutions with valuable advice on how to ensure the Equator Principles are applied to the projects they finance.

The loan documentation is a key document for ensuring the project sponsor applies the Equator Principles beyond the signing of the loan agreement, right through the construction and operation, and where appropriate the decommissioning, phases of the project. 

Failure to comply with the loan covenants may prevent or delay the project sponsor being able to drawdown on the loan, or even an event of default whereby, the lenders are entitles to cancel the loan, and all monies lend are immediately payable by the borrower.

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One Response to Incorporating Environmental and Social considerations into Loan Documentation – New Guidance for Equator Principles Financial Institutions

  1. The loan agreement language referred to is ‘standard template’ and has been in use for many years for syndicated project finance deals aspiring to meet IFC Performance Standards (and its derivative, the Equator Principles). It seesm to me that the significance of the publication of the loan documentation guide is its availability to the broader public and NGOs – and perhaps some instituions not normally operating in line with Equator Principles/IFC Performance Standards. You may also be interested in one of my recent blog posting re IFC Performance Standards posted here http://www.prizmablog.com.

    Mehrdad

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