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BankTrack, the global NGO network monitoring private sector bank operations, calls upon the Equator Principles Financial Institutions (EPFIs) to ensure that the next version of Equator Principles will better deliver on their core Outside Job; make a positive difference to project affected communities and to the environment.
The Equator Principles Association, meeting this week in Washington DC for their Annual Meeting, is about to publish the draft text of the new version of the Equator Principles (EPIII). The update became necessary after the International Finance Corporation recently adopted a new version of their Performance Standards, to which the Equator Principles are pegged.
A new report published today by BankTrack makes numerous detailed recommendations to the EP Association on how the new Principles can move from being primarily a risk management tool for adopting banks to a set of commitments that also make a substantial difference to people and planet. Amongst other things, BankTrack calls upon the EPFIs to:
- Dramatically expand the transparency of the Principles and the Association, as well as the disclosure of information by clients to local stakeholders.
- Increase the accountability of the initiative and adopting banks towards stakeholders
- Expand the scope of the Principles, to cover all financial services provided to clients to finance projects
- Adequately deal with the impact of bank operations on climate change
- Adequately deal with the human rights obligations of banks
The report observes that "over the last years the EPFIs have improved mainly on the inner workings of the Principles, but that these efforts appear to focus more on managing the risks banks associate with adopting the Principles itself than with improving the impact the Principles are supposed to make on communities and the environment. The Equator Principles thus risk to become an inward looking initiative, largely irrelevant to outside stakeholders"
To counter this, the report calls upon the EPFIs to turn their attention and get the outside job done. This should happen by developing a set of Principles.. "based on the notion that proper risk management for all involved requires transparency of process, inclusion rather than secrecy, a recognition of the fallibility of everyone and therefore the need for accountability and access to redress, dialogue rather than desk studies as a means to understand perspectives and risks, the careful weighing of options and legitimate interests of all involved, an understanding of the limits to business imposed by nature and the environment, as well as the fundamental rights of all people, and in general a clear understanding of the responsibility of a bank to help achieve a more sustainable world"
"This overhaul and redirection of the Equator Principles is already long overdue, but the Equator Association now has a real opportunity to deliver on their outside job,", says Johan Frijns, coordinator of BankTrack; "while they are at it they can also restore some of the trust that the public has lost in the banking sector after the financial crisis"
BankTrack will carefully monitor the further development and subsequent implementation of the new Equator Principles in the months to come.
- The Outside Job report can be found here.
- For more information please contact Johan Frijns, BankTrack coordinator at <email@example.com>
- Details on the Equator Principles can be found at www.equator-principles.com