Transitioning from EPII to EPIII is a bit like a Green Bay Packer Game

Equator Principles just like a Packer Game

Don’t let the Mexican wave distract you from the game at play on the field now. (Shortlink:

Yesterday, I was watching a pre-season American football game between the Green Bay Packers and the Seattle Seahawks. During this fun time (even if Packers lost...), my phone kept alerted me to interesting interventions relating to my recent blog/LinkedIn post that pondered about the applicability of the Equator Principles and IFC Performance Standards in countries like Canada. So while the Packers were experimenting with their second and third string quarterbacks, I sneaked a peak at the comments which I was receiving via LinkedIn.

Cristian Franz Thorud highlighted the problem that the EP list of “Designated Countries” is different from the previous list which was based on OECD countries designated as High-Income. Cristian noted that Chile is an OECD country designated as High-Income but that it was not listed in the new EPIII list of 31 “Designated Countries” (which I also reproduced in my previous blog). He raised the question: should you only apply/rely on local standards or use the IFC PS for countries like Chile?

Staying with metaphors borrowed from American football, a game my kids continue to try to explain to me, one could punt this question in several different directions. First, I assume that this is a project-specific question and not simply one derived from an academic interest in EPIII. So the purpose and timing of the ESIA, project review (by an Independent Environmental and Social Consultant or Independent Engineer) and expected funding (sources/timing) will be key points to consider in answering Cristian’s question. Presumably, the objective of the ESIA/Additional Disclosure Package and/or Independent Review is to satisfy the requirements of investors which might include Equator Banks, Export Credit Agencies and/or Multilateral Financial Institutions.

Let’s step back from the excitement of the recent introduction of EPIII – which seems a bit like the Mexican Wave distracting everyone from the game at play on Packer’s Lambeau Field - and look at when EPIII actually has to be applied. The transition guidance provided to help move Equator Banks (and their clients!) from EPII to EPIII is a good starting point. It highlights that EPII can continue to be applied to new transactions, that is mandates signed between 4 June and December 2013.

Generally speaking, this would mean that for projects which are currently under review by Equator Banks the definitions provided in EPII still apply. This also means that the Equator Principles Associations has until the end of 2013 to review and update its list of Designated Countries and address the apparent uncertainties contained in Cristian’s comments.

What is your take on Cristian Franz Thorud’s questions? What other uncertainties do you see emerging from the introduction of EPIII?

Allow me to also to pass along the information about Prizma's training courses on the Equator Principles and IFC Performance Standards. The next 1-day courses will be held in London (23 Sept 2013, hosted by Parsons Brinkerhoff) and Toronto (29 Oct 2013, hosted by TD Bank) and you can access the course brochure here.