Key: Equator Principles

The Equator Principles - investor project assessment criteria

A financial industry benchmark for determining, assessing and managing social & environmental risk inproject financing

Link

Summary:

Principle 1: Review and Categorisation

1. social and environmental review and due diligence
2. categorisation of project based on magnitude of potential impacts and risks

Principle 2: Social and Environmental Assessment

1. Assessment to address relevant social and environmental impacts and risks of the proposed project, including mitigation and management measures.

• a) assessment of the baseline social and environmental conditions
• b) consideration of feasible environmentally and socially preferable alternatives
• c) requirements under host country laws and regulations, applicable international treaties and agreements
• d) protection of human rights and community health, safety and security (including risks, impacts and management of project’s use of security personnel)
• e) protection of cultural property and heritage
• f) protection and conservation of biodiversity, including endangered species and sensitive ecosystems in modified, natural and critical habitats, and identification of legally protected areas
• g) sustainable management and use of renewable natural resources (including sustainable resource management through appropriate independent certification systems)
• h) use and management of dangerous substances
• i) major hazards assessment and management
• j) labour issues (including the four core labour standards), and occupational health and safety
• k) fire prevention and life safety
• l) socio-economic impacts
• m) land acquisition and involuntary resettlement
• n) impacts on affected communities, and disadvantaged or vulnerable groups
• o) impacts on indigenous peoples, and their unique cultural systems and values
• p) cumulative impacts of existing projects, the proposed project, and anticipated future projects
• q) consultation and participation of affected parties in the design, review and implementation of the project
• r) efficient production, delivery and use of energy
• s) pollution prevention and waste minimisation, pollution controls (liquid effluents and air emissions) and solid and chemical waste management

Principle 3: Applicable Social and Environmental Standards

1. International Finance Corporation (IFC) Performance Standards;

• 1: Social & Environmental Assessment & Management System
• 2: Labor and Working Conditions
• 3: Pollution Prevention and Abatement
• 4: Community Health, Safety and Security
• 5: Land Acquisition and Involuntary Resettlement
• 6: Biodiversity Conservation and Sustainable Natural Resource Management
• 7: Indigenous Peoples
• 8: Cultural Heritage

2. EHS Guidelines

• REF Exhibit IV: Industry-Specific Environmental, Health and Safety (EHS) Guidelines (Link)

Principle 4: Action Plan and Management System

1. Action Plan
   Prepare an Action Plan addressing the Assessment (Principle 2), describing and prioritising actions needed to implement mitigation measures, corrective actions and monitoring measures necessary to manage the impacts and risks identified in the Assessment.
2. EMS
   Implement a Social and Environmental Management System that addresses the management of these impacts, risks, and corrective actions required to comply with applicable host country social and environmental laws and regulations, and requirements of the applicable Performance Standards and EHS Guidelines.

Principle 5: Consultation and Disclosure

1. Consultation
   Ensure that free, prior and informed consultation and informed participation with affected communities has been conduced in a structured and culturally appropriate manner to adequately incorporate affected communities’ concerns.
2. Disclosure
   Assessment (Principle 2) documents and Action Plan (Principle 4) to be made available to the public for a reasonable minimum period in the relevant local language and in a culturally appropriate manner. Document the process and results of the consultation, including any actions agreed resulting from the consultation.

Principle 6: Grievance Mechanism

1. Establish a grievance mechanism
   Establish a grievance mechanism as part of the management system to ensure that consultation, disclosure and community engagement continues throughout construction and operation of the project and to receive and facilitate resolution of concerns and grievances about the project’s social and environmental performance raised by individuals or groups from among project-affected communities.
2. Publicise grievance mechanism
   The borrower will inform the affected communities about the mechanism in the course of its community engagement process and ensure that the mechanism addresses concerns promptly and transparently, in a culturally appropriate manner, and is readily accessible to all segments of the affected communities.

Principle 7: Independent Review

1. Third Party Review
   Review of the Assessment, AP and consultation process documentation by independent social or environmental expert not directly associated with the project to ensure consistency with Equator Principles.

Principle 8: Covenants

1. Finance conditional upon compliance with covenants.
   Agree to Covenants in financing documentation:

• a) to comply with all relevant host country social and environmental laws, regulations and permits in all material respects;
• b) to comply with the AP during the construction and operation of the project in all material respects;
• c) to provide periodic reports in a format agreed with EPFIs (with the frequency of these reports proportionate to the severity of impacts, or as required by law, but not less than annually), prepared by in-house staff or third party experts, that
  i) document compliance with the AP (where applicable), and
  ii) provide representation of compliance with relevant local, state and host country social and environmental laws, regulations and permits; and
• d) to decommission the facilities in accordance with an agreed decommissioning plan.

Principle 9: Independent Monitoring and Reporting

1. Appoint an independent expert to verify monitoring information to ensure ongoing monitoring and reporting over the life of the loan.
   

Principle 10: EPFI Reporting

1. Report publicly (annually) about Equator Principles implementation processes and experience