Equator Principles A bright beacon for responsible banking

Equator Principles A bright beacon for responsible banking Update on current approaches taken by project finance banks in assessing social and environmental impacts of new projects. Overview of their application and benefits for the Palm Oil Industry. David A. Glenister SGS United Kingdom Ltd

Agenda
Introduction to Equator Principles
The Equator Principles Financial Institutions (EPFIs)
The Benefit
The Factual sheet
Testimonial
Application of Equator Principle in Palm Oil Industries
Conclusion

The Equator Principles is a set of environmental and social benchmarks for managing environmental and social issues in development project finance globally.
The Equator Principles were developed by private sector banks – led by Citigroup, ABN AMRO, Barclays and WestLB and were launched in June 2003.
The banks chose to model the Equator Principles on the environmental & social standards of the World Bank and International Finance Corporation (IFC).

In July 2006, the Equator Principles were revised, increasing their scope and strengthening their processes.
The principles apply to all new project financings globally with total project capital costs of US$10 million or more , and across all industry sectors.
the Principles also apply to all project financings covering expansion or upgrade of an existing facility where changes in scale or scope may create significant environmental and/or social impacts, or significantly change the nature or degree of an existing impact.

The Equator Principles Financial Institutions
Sixty financial institutions from twenty-three countries have adopted the Equator Principles. These financial institutions operate in over 100 countries. As a result, the Equator Principles have become the project finance industry standard for addressing environmental and social issues in project financing globally.
Once adopted by banks and other financial institutions, the Equator Principles commit the adoptee not to finance projects that fail to follow the processes defined by the Principles.

ABN AMRO Bank, N.V.
ANZ
Banco Bradesco
Banco de la Republica Oriental del Uruguay Banco do Brasil
Banco Galicia
Banco Itaú
BankMuscat
Bank of America
BMO Financial Group
BTMU
Barclays plc
BBVA
BES Group
Calyon
Caja Navarra
CIBC
CIFI
Citigroup Inc.
CORPBANCA
Credit Suisse Group
Dexia Group
Dresdner Bank
E+Co
EKF
Export Development Canada
Financial Bank
FMO
Fortis
HBOS
HSBC Group
HypoVereinsbank
Institutions Which Have Adopted the Equator Principles

ING Group
Intesa Sanpaolo
JPMorgan Chase
KBC
KfW
la Caixa
Lyod TSB
Manulife
MCC
Mizuho Corporate Bank
Millennium bcp
National Australia Bank
Nordea
Nedbank Group
Rabobank Group
Royal Bank of Canada
Scotiabank
SEB
Societe Generale
Standard Chartered Bank
SMBC
TD Bank Financial Group
The Royal Bank of Scotland
Unibanco
Wachovia
Wells Fargo
WestLB AG
Westpac Banking Corporation
Institutions Which Have Adopted the Equator Principles

The Benefit
Demonstration of responsible project financing.
Provide effective project finance risk management, through the incorporation of screening process for projects which are based on IFC’s environmental and social screening process.
Protect Financial Institutions from the environmental and social liabilities of the project development. This can happen if the borrower disappears from the scene, or if they are held to have been complicit in the risks the development ran and failed to seek preventative measures
Protect the environment and provide more sustained approach to corporate social responsibility, borrowing money to finance development projects can often be like doing battle with a very different kind of ‘green-eyed monster’. But with the right preparation and advice, it’s a struggle well worth having.

The Factual Sheet Summarized from :EP website at http://www.equator-principles.com/join.shtml

The Royal Bank of Scotland Group (RBS)
RBS was one of the first ten financial services organizations to adopt
the Equator Principles when they were launched in June 2003 in
Washington. We felt they could bring a level of social and
environmental evaluation, transparency and discipline to projects
which might otherwise be absent
(RBS 2006 Corporate Social Responsibility Report)
CITI Group
One of the biggest challenges of EPFI’s is demonstrating that
compliance with the Equator Principles leads to improved
environmental and social outcomes. CITI has consequently reviewed
its project finance portfolio for examples of how its environmental
and social due diligence led to improved outcomes
(Citizenship Report 2006 )
Testimonial

BARCLAYS
All financial organizations must act together in ensuring greater
accountability and sustainable innovation from themselves and the
companies they finance. Proven adherence to such standard by our
clients is a positive indicator from a risk management perspective
(Barclays Corporate Responsibility Report 2006 – Responsible Banking)
WestLB
WestLB Actively participated in the amendment of the Equator
Principles in 2006. In 2007, WestLB and other financial institutions
received the International Finance Corporation’s “Chairman’s Award
for Leadership in Sustainable Project Finance” in recognition of their
leading role in the establishment and refinement of the Principles
(WestLB 2007 Sustainability Report)
Testimonial

Equator Principles Criteria
Principle 1 : Review and Categorization (of projects)
Principle 2 : Social and Environmental Assessment
Principle 3 : Applicable Social and Environmental Standards
Principle 4 : Action Plan and Management System
Principle 5 : Consultation and Disclosure
Principle 6 : Grievance Mechanism
Principle 7 : Independent Review
Principle 8 : Covenants
Principle 9 : Independent Monitoring and Reporting
Principle 10 : EPFI Reporting .

The Equator Principles can bee seen closely mirror the International
Finance Corporation (IFC) Performance Standards on Social and
Environmental Sustainability,:
Performance Standard 1: Social and Environmental Assessment and Management System
Performance Standard 2: Labor and Working Conditions
Performance Standard 3: Pollution Prevention and Abatement
Performance Standard 4: Community Health, Safety and Security
Performance Standard 5: Land Acquisition and Involuntary Resettlement
Performance Standard 6:Bio-diversity Conservation and Sustainable Natural Resource Management
Performance Standard 7: Indigenous Peoples
Performance Standard 8: Cultural Heritage

Application of Equator Principle in Palm Oil Industries Cross Reference Equator Principles and Roundtable Sustainable Palm Oil

Application of Equator Principle in Palm Oil Industries Cross Reference IFC Performance Standard and Roundtable Sustainable Palm Oil

Cross Reference IFC Performance Standard and Roundtable Sustainable Palm Oil Cross Reference IFC Performance Standard and Roundtable Sustainable Palm Oil

Conclusion
The Equator Principles is leading recognized approach and can be applied to smaller projects such palm oil processing and plantation.
This will bring benefit success in strengthening the control on social and environmental impact
Roundtable Sustainable Palm Oil can be used as baseline to fulfill requirements of International Finance Corporation (IFC) Performance Standard and Equator Principles

Any Question ?
David Glenister
SGS United Kingdom Ltd
SGS House, 217-221 London Road
Camberley
Surrey GU15 3EY
United Kingdom
Phone : +44(0) 1276 697 877
Fax : +44(0) 1276 697696
Web : www.sgs.com

Equator Principles A bright beacon for responsible banking

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