Financial institutions announce revision of equator principles

Friday, 07 July 2006

Underscoring the global application of environmental and social risk management

The Equator Principles Financial Institutions (EPFIs) today announced the launch of the revised
Equator Principles. The revision underscores how far the financial sector has progressed in
embedding in the project finance arena a common set of best practices to manage social and
environmental risks related to project financing.
Today’s revised principles reflect the experience of the 40 financial institutions around the world that
currently apply the Principles. The principles also reflect the recent revisions to the International
Finance Corporation’s (IFC) Performance Standards, upon which the Equator Principles are in part
based. In developing these changes, the EPFIs actively involved clients, civil society groups and
official development agencies, all of whom provided constructive and valuable feedback that the
EPFIs reviewed and considered in the revision process.

The Equator Principles apply globally and to all sectors and have been revised in the following ways:
• The Principles apply to all project financings with capital costs above USD 10 million. This
threshold was lowered from USD 50 million.
• The Principles now also apply to project finance advisory activities.
• The revised Principles now specifically cover upgrades or expansions of existing projects
where the additional environmental or social impacts are significant.
• The approach in applying the Principles to countries with existing high standards for
environmental and social issues has been streamlined.
• Each EPFI is now required to report on the progress and performance of Equator Principles’
implementation on an annual basis.
• Stronger and better social and environmental standards, including more robust public
consultation standards.

The EPFIs are proud of the progress the Equator Principles have made in the past three years. The
development and application of the Equator Principles have been a huge step forward for the industry,
in terms of having a common framework and language for environmental and social issues in the
project finance industry. The Equator Principles have enabled the financial institutions to better
assess, mitigate, document and monitor the potentially adverse social and environmental risks
associated with financing projects.

Participating financial institutions commit to financing only those projects that comply with the Equator
Principles, and commit to implementing the revised Equator Principles into business and risk
management processes in a manner consistent with its organizational structure. Of the 40 financial
institutions that have shared their experience in devising the revised Equator Principles, 33 have today
adopted them and the others are expected to do so in the coming weeks.

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