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