There were some excellent discussions on the Equator Principles (EP) at the Ethical Corporation – Sustainable Finance Summit. The main hot topics were:
- The need to manage the success of the principles. The need to prevent their extension to areas other than Project Finance weakening the brand, due to insufficient leverage in such areas.
- The EP’s have lead to an unprecedented level of collaboration by Financial Institutions.
- There is a lack of mechanisms for demonstrating how the adoption of the EP’s have contributed to business performance and financial benefits, but despite this FI’s are see these issues as key to their core branding.
- There is a need for a pragmatic approach to their application, in certain situations when good project sponsors and FI’s have turned down projects with high potential environmental and social risks, the projects have been progressed by weaker parties and consequently developed more severe environmental and social problems.
- There is a need to manage expectations about what the EP’s will achieve – e.g. they have not been established to be a tool for equity.
- There has been a lack of developing market banks and a notable absence of leading French Banks adopting the EP’s.
- The need for sufficient lead in times to review Finance deals to avoid situations where problems are picked up too late on a project to enable compliance.
- Some banks are striving to be leaders in sustainability, while others believe the EP’s have created a level playing field.