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Putting some bite into the Equator Principles
29 November 2011
There has been persistent scepticism about the Equator Principles’ ability to encourage best practice at participating banks. But evidence from the mining industry is that they are changing sponsor behaviour. By Christopher Langdon and Claudia O’Brien, partners, Latham & Watkins.
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[equator principles]
[esrm]
[epa]
Since 2003, Equator Principles financial institutions, most of them major banks, have provided about 85% of the world’s project finance capacity. These institutions provide financing only to projects that comply with the Equator Principles, a voluntary set of guidelines designed to ensure large projects are financed in socially and environmentally responsible ways. Although over 70 financial institutions have adopted the principles, critics argue that they are merely greenwash, and have little actual impact on the financial or, perhaps more importantly, extractive, industries.
Evaluation of these criticisms is difficult because Equator institutions have reported little about their compliance with the principles. A comprehensive survey conducted by the authors of this article of the institutions’ reporting performance under the current principles suggests that, in general, reporting by the institutions is inconsistent and fails to adequately highlight what impact the principles are having. Is this because the principles in fact have little actual environmental...
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