Comments on: Equator Principles – Progress or Failure?

By: Review of 3 years of IFC Performance Standards | Prizma

Review of 3 years of IFC Performance Standards | Prizma — Thu, 11 Feb 2010 20:20:16 +0000

[...] Equator Principles – Progress or Failure? [...]

By: Equator Principles: Mining, Oil & Gas Deal Transparency | Prizma

Equator Principles: Mining, Oil & Gas Deal Transparency | Prizma — Thu, 04 Feb 2010 15:28:04 +0000

[...] user friendly disclosure practices of multilateral financial institutions like the IFC or the EBRD, advocacy groups lament lack of deal transparency by Equator Banks. Although there is room for improvement, I wonder if the existing market transparency is already [...]

By: Mehrdad Nazari

Mehrdad Nazari — Mon, 25 Jan 2010 11:55:22 +0000

I contacted Herman Mulder, one of the key people behind the development of the Equator Principles (and now also blogging http://www.hermanmulder.nl/) to hear about his recollections of why the Principles were developed. He provided the following response:

“Equator Principles meant creating a level playing field amongst the lead PF transactors, each of which had, in isolation, business principles but yet where struggling with civil society reactions to their involvement. Such level playing field by sector leaders is crucial for advancement of more responsible business practices: they should raise the bar and improve market practices.”

By: Mehrdad Nazari

Mehrdad Nazari — Fri, 22 Jan 2010 14:06:38 +0000

Thanks for your comments, Mary. The required shift you mentioned can surely not just be imposed by some sort of guidelines focused on banks (although they also have a role to play). Perhaps the weak political outcome in Copenhagen illustrated that better than anything…

By: Mary Walsh

Mary Walsh — Fri, 22 Jan 2010 11:44:14 +0000

I’ve worked on a number of projects where the Equator Principles have been invoked and it’s true that they do raise the issue of environmental compliance and sustainability to a level that was previously not seen. In fact, they’ve played an important role in getting developers to meet best practice and not to cut corners.

However, as noted in the post above, they don’t appear to guide the underlying decision as to what investments will be made – rather, they strive to ensure that the projects in which the investment is made meets certain minimum requirements.

On the issue the NGOs above raise, alas it will take more than a reworking of the Equator Principles – rather what will be needed is a fundamental shift in the investment psyche – a holistic consideration of the impact of the project.
To that end, the NGO appeal may be missing the point.