Equator Principles Looking East?

MizuhoOn 1 May 2014, Mizuho Bank will become the first Asian bank to chair the Equator Principles Association originally adopted by ten US and European financial institutions in June 2003. Will this mobilize more Asian financial intuitions to adopt EPs? - Shortlink: http://wp.me/p27qSt-Di

The "Equator Principles” or EPs are a set of guidelines based on the IFC Performance Standards (and its predecessors) to help banks better manage social and environmental issues related to the financing of development projects. The 10 founding banks were ABN AMRO, Barclays, Citigroup, Crédit Lyonnais, Credit Suisse First Boston, HVB Group, Rabobank Group, The Royal Bank of Scotland, WestLB, and Westpac, which, at the time, represented approximately 30% of the project loan syndication market globally.

In October 2003, Mizuho Corporate Bank, Ltd. (now Mizuho Bank) became the first Asian bank to adopt the Equator Principles. On May 1st, Mizuho Bank will become the chair of the Equator Principles Association which now boasts a membership of 79 global financial institutions.

At this time, Asian financial institutions comprise only a relatively small component of the Equator Principles Association. In addition to early adopter Mizuho Bank, other Asian-based “Equator Banks” include Bank of Tokyo-Mitsubishi UFJ, Japan (EPs adopted December 2005), IDFC Limited, India’s leading integrated infrastructure finance player (EPs adopted June 2013), Industrial Bank Co., Ltd, China’s first “Equator Bank” (EPs adopted 2008), and Sumitomo Mitsui Banking Corporation, Japan (September 2007).

Why have Asian financial institution not adopted the EPs in greater numbers?  Will the leadership of Mizuho Bank be able to mobilize them? Or will they not see much value in adopting the Equator Principles, given more reliance on relationship banking instead of syndication, or view their application as too cumbersome?

You may also be interested in some previous blog posts about the EPs:

About the author: Mehrdad Nazari (MSc, MBA) is a Senior ESIA & Sustainability Advisor, and Director of Prizma. He has over 20 years of professional experience and has been involved in engaging and supervising Independent Engineers while serving at the European Bank for Reconstructions and Development, a multilateral financial institution, supported Independent Engineers in conducting project reviews, responded to Independent Engineer’s reviewing his ESIA contributions, and has also seen how Equator Principles and IFC Performance Standards are used as benchmarks in the context of international arbitration. You can access Mehrdad’s LinkedIn profile here.