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How do you apply the Equator Principles and IFC Performance Standards in Canada?

In Which countries does EPIII Apply

Occasionally, I receive an email or call asking if and how the Equator Principles (EP) and its provisions related to IFC Performance Standards apply in certain ‘Western Jurisdictions’. This blog entry highlights previous guidance contained in EPII and how this has been simplified in the updated EPIII, but remains subject to change.  (Shortlink: http://wp.me/p27qSt-At) 

Previously, the definition highlighting where the IFC Performance Standards have to be applied as part of an Equator Principles review was a bit of a mouthful. It noted that for “projects located in non-OECD countries, and those located in OECD countries not designated as High-Income, as defined by the World Bank Development Indicators Database, the Assessment will refer to the then applicable IFC Performance Standards (Exhibit III) and the then applicable Industry Specific EHS Guidelines (“EHS Guidelines”) (Exhibit IV).” Using this definition, you could take the next step and identify the remaining countries where the IFC PS did not have to be applied.

The new EPIII jargon for the same thing is simpler and, I think, more elegant. It simply refers to “Designated Countries”. For investments/projects located in such countries, a Project Sponsor and/or an Independent Engineer is not expected to rely on the IFC Performance Standards and its numerous guidelines to demonstrate that the project/investment under review is aligned with Good International Industry Practice (GIIP). This is due to the fact the “Designated Countries”, which include countries like Canada, the UK and the USA, are deemed to have robust environmental and social governance, regulatory systems and institutional capacity in place to protect their people and the natural environment.

The current (as of August 2013) list of “Designated Countries” contained on the website of the Equator Principles is relatively short and is provided further below. Although this list is being reviewed, it is expected that tit will not be significantly different from the current High-Income OECD Country list. If the host country of your project/investment is not on this list, you need to use the EPs and IFC PSs.

Do Equator Banks still need to categorize, use Independent Engineers, and include in their annual EP-disclosure projects/investments they finance/reject in “Designated Countries”, you might ask? This seems like a good question for a future blog entry...!

Update: Check out also a  related blog entry: Precedent setting application of Equator Principles in High-Income OECD Countries? It highlights that the Equator Principles  and IFC Performance Standards have also been applied in a US$ 20 billion limited recourse financing deal for the Ichthys LNG project in Australia, a High OECD Country.

Our next  training courses on the Equator Principles and the IFC Performance Standards will be hosted by TD Bank on October 29, 2013 in Toronto. Are you curious about the evaluation of our last course hosted by Parsons Brinkerhoff (thanks!) in London? Here you go: EP3 and IFC PS Course: the Good, Bad and Ugly! You can access the course brochure here: http://wp.me/p27qSt-zK.

 

Designated Countries” (EP website queried 20 August 2013)

1             Australia

2             Austria

3             Belgium

4             Canada

5             Czech Republic

6             Denmark

7             Estonia

8             Finland

9             France

10           Germany

11           Greece

12           Hungary

13           Iceland

14           Ireland

15           Italy

16           Israel

17           Japan

18           Korea, Rep.

19           Luxembourg

20           Netherlands

21           New Zealand

22           Norway

23           Poland

24           Portugal

25           Slovak Republic

26           Slovenia

27           Spain

28           Sweden

29           Switzerland

30           United Kingdom

31           United States

 

 

 

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6 Responses to “How do you apply the Equator Principles and IFC Performance Standards in Canada?”

  1. August 24th, 2013 at 5:54 pm

    Transitioning from EPII to EPIII is a bit like a Green Bay Packer Game | PRIZMA says:

    […] « How do you apply the Equator Principles and IFC Performance Standards in Canada? […]

  2. August 25th, 2013 at 6:38 pm

    Mehrdad Nazari says:

    This comment was posted on LinkedIn by Leslie Bol, M.Sc., B.Sc., R.P. Bio.

    “It’s unfortunate that we don’t abide by the IFC performance standards here in Canada as they are more stringent, particularly for biodiversity and ecological services, than the current legislation that we have either provincially or federally.”

  3. August 25th, 2013 at 6:38 pm

    Mehrdad Nazari says:

    This comment was posted by Osamu Odawara

    “You should apply IFC requirements as we do so in our project in Australia.”

  4. August 25th, 2013 at 6:40 pm

    Mehrdad Nazari says:

    I replied on LinkedIn with this note:

    “Thx for your comments.- I hear similar comments in some of my IFC PS/EP courses delivered in Canada. It seems to me that good ESIA practice is, in fact, not dependent on either Canadian regs or IFC PS. Things like stakeholder engagement (indegneous or otherwise) or dealing with biodiversity are not ‘optional’ but simply good ESIA practice. Is the challenge perhaps convincing clients that dealing with such issues is not ‘scope creep’ but current/good practice? – BTW, who drafted that low-ball/capped proposal and why do clients continue to fall for it…? :-)

  5. August 25th, 2013 at 6:41 pm

    Mehrdad Nazari says:

    And Cristian Franz Thorud commented as follows:

    “The problem is that EP list of “designated countries” is diferent than that one of OECD countries designated as High-Income as defined by the World Bank Development Indicators Database. So, the question is: for a country like Chile (wich figures as an OECD country designated as High-Income but does not figure in the EP list of designated countries) what set of standards should apply? The local regulations or the IFC PS?”

  6. August 25th, 2013 at 6:42 pm

    Mehrdad Nazari says:

    Cristian‘s note got my attention. I responded with this note and followed up with another blog:

    “Interesting question. Although I sense there is a specific context you may have in mind, i can think of a couple of general approaches/answers which will also consider timing (do you need to apply EP3 or EP2) and objectives/targets (permitting/EP/ECA/MFI financing?). Will need to draft/post a blog to give your question full justice. – But I would also encourage others to chime in. What do you think: would the IFC PS apply in Chile?”

    –> Transitioning from EP2 to EP3 is a bit like a Green Bay Packer Game. Don’t let the Mexican wave distract you from the game at play on the field now. – Shortlink: http://wp.me/p27qSt-AB

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