Equator Principles – Only Greenwashing?

As I note that another bank - NIBC - has joined the group of financial institutions which have adopted the Equator Principles, I recalled a friendly request and equally friendly but probing questions prompting this blog entry.

As I blogged earlier, the recently formed Equator Principles Association  commissioned a strategic review of the Equator Principles. This seems to be mainly driven by the pending changes emerging from the revisions of the IFC Performance Standards, of which the Equator Principles are a derivative, and continued criticism by certain advocacy groups. These groups remain concerned that, inter alia, the Equator Principles have not heralded a move away from extractives, pipelines, dams, forestry and other projects they are concerned about.

A few weeks ago, a professional involved with the Equator Principles Association asked me to contribute to the on-going consultation and strategic review process. This, in turn, reminded me of a conversation I had on the side lines of IFC’s CSR Forum held in Washington DC earlier this year. An experienced CSR professional asked me about my thoughts about the Equator Principles and if they have really made any difference. Putting it to the point, he asked me if I felt that this was just another form of ‘greenwashing’.

Being involved in helping extractive projects transition their environmental impact assessments (note the missing word: social) and programs from 'old school' EIAs to bankable ESIAs & projects that demonstrably meet the Equator Principles, I had some clear views concerning question of greenwashing: Yes and No!

Reflecting on these re-occurring questions/discussions, it seems that there are many ways the Equator Principles Association could demonstrate the benefits of the Equator Principles. Case studies of “before” and “after” could go some ways to separate myths from reality.

Why not describe some real-life capital investment project which, following a review by independent engineers, showed major weaknesses/gaps when reviewed against the Equator Principles/IFC Performance Standards? Now discuss the additional steps and measures the developers had to incorporate into its project to receive the “green light” in order to mobilize financing by Equator Banks. But that may be embarrassing to some of the parties involved and/or challenge some of the confidentiality clauses all parties may have agreed to prior to considering financing and initiating the due diligence process…

Another more academically oriented approach might involve a review of a dozen or two financed deals with and without the participation of Equator Banks. A review could identify what impacts the involvement of Equator Principle Financial Institutions made to those deal, if any.

What other suggestions to showcase the real impacts of the Equator Principles would you have? There are always the projects advocacy NGOs highlight each year during the AGMs of the IFC, EBRD, etc…

3 Comments to Equator Principles – Only Greenwashing?

  1. […] some 70 project finance banks and I have blogged about the Equator Principles before, including here and here. The EP Association submitted its original comments already in July 2010. Interestingly, […]

  2. […] At this time, it is unclear if IFC’s Ombudsman/Advisory Ombudsman (CAO) office (or others) will be asked to review why IFC proceeded with a $12 million equity investment in this project. [IFC’s CAO is currently helping to mediate other mining & metals project complaints related to BHP’s Mozal aluminum smelter in Mozambique, about which I blogged here: NGOs Testing BHP Billiton and Investors’ Metal.] But, in many ways, this may be an interesting project to dissect and review for lessons learned given the on-going review of the IFC Performance Standards and the Equator Principles about which I blogged here and here. […]

  3. […] Second, ICMM is pursuing a more formalized relationships strategy using the AA1000 Stakeholder Engagement Standard. This should not come as a big surprise given the common approach of formalized stakeholder mapping and engagement routinely conducted by ICMM’s company members when pursuing new projects, conducting environmental and social impact assessments, and satisfying Equator Principles and IFC Performance Standards required by most project finance banks (see also my related blogs: Remaining Obstacles to Revisions of IFC Performance Standards and Equator Principles – Only Greenwashing?). […]

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