The Equator Principles (EPs) are a framework for assessing and managing environmental and social risk associated with project financing. The EPs provide a minimum due diligence standard and monitoring protocol supporting responsible risk assessment and decision-making. The EPs apply globally, to all industry sectors, and are focused on risk management for projects financed by the financial institutions that have adopted the EPs. Currently, the EPs have been adopted by 105 financial institutions across 38 countries. The EPs oblige financial institutions to make informed investment decisions and withhold or withdraw financing on projects or assets not conforming to “good international industry practice.” The EPs incorporate IFC’s Environmental and Social Performance Standards (IFC Performance Standards) and World Bank Group Environmental, Health, and Safety Guidelines.
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Equator Principles Association
Proposed Revisions to Equator Principles Reflect Evolving Standards for Global ESG Diligence
Environmental, social and governance diligence has been described as a non-financial mechanism, risk assessment or sustainability strategy. ESG diligence for a particular transaction may take a variety of paths and there are many methodologies that can be used to perform ESG diligence. Lawyers can facilitate the ESG diligence process, assist in the assessment of the various sometimes inconsistent commitments and determine the proper scope and documentation to achieve the client’s goals.
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Equator Principles Gain Global Traction
EP Association Updating International Environmental Standards Following Admission of New Member Financial Institutions from China, Japan, Korea, Sweden and Taiwan
Following its annual meeting in São Paulo, Brazil, the Equator Principles Association (EP Association) announced plans to update its globally recognized risk management framework to reflect significant changes to the manner in which environmental and social impacts and risk mitigation strategies are recognized and managed by financial institutions, corporations, governments, non-governmental organizations (NGOs) and society.
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