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New set of Equator Principles criticized for failing to uphold indigenous rights and combat climate change

Following the commitment by the Equator Principles Association to review and update the Equator Principles in 2017, an updated version of the Equator Principles, EP4, was released in November 2019. Despite calls from civil society groups to stop funding climate disaster & abuses of Indigenous rights, the updated set of principles contains “no meaningful improvements” and “completely fail to meet the challenges of protecting Indigenous peoples’ rights and combating climate change”, according to BankTrack.

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26 November 2019

New set of Equator Principles fails to act on indigenous rights and climate change, NGOs say

Author: BankTrack

“With New Equator Principles, Banks Fail to Act on Climate or Indigenous Rights”, 21 November 2019

Equator banks finishing their annual meeting in Singapore… agreed on a new set of Equator Principles that contain no meaningful improvements, and completely fail to meet the challenges of protecting Indigenous peoples’ rights and combating climate change. 

Ignoring a passionate call… from 312 civil society groups from 58 countries to ‘act with courage and ambition’ and take bold action on climate change and human rights, the Equator Principles Association (EPA) instead has opted for continuing with ‘business as usual’ with a text which only tweaks the current Principles and fixes none of the concerns that led to the demand for a revision two years ago.

“It is outright astonishing that a process that set out to make the outdated 2013 version of the Equator Principles future proof, taking into account the outcomes of the 2015 Paris climate agreement, which took two years to complete and involved nearly a hundred banks and hundreds of stakeholders, has in the end produced a document that is hardly distinguishable from the 2013 version,” said Johan Frijns, director of BankTrack…

The ‘targeted update process’ agreed upon by the EPA in 2017 aimed at improvements in four areas…

Regarding the ‘designated countries’ distinction, the revised EP4 maintains the unjustified distinction between those high-income countries with “robust environmental and social governance, legislation systems and institutional capacity designed to protect their people and the environment”, and ‘non-designated’ countries (typically poorer countries in the Global South) that lack such systems, where projects need to comply with IFC Performance Standards…

Regarding the scope of the Principles, EP4 only lowers the threshold for corporate loans from 100 to 50 million USD and extends the Principles to include Project-Related Refinance and Project-Related Acquisition Finance, while excluding other financial instruments often used to fund projects…

Regarding Indigenous rights, EP4 falls short of a clear commitment to uphold Indigenous peoples’ rights including their right to grant or withhold consent for projects situated on Indigenous land and territories (known as Free, Prior and Informed Consent or FPIC), including in ‘designated countries’…

With regard to climate change, EP4… does not include even a single requirement that would exclude finance for projects that endanger the Paris goals…  the Principles continue to allow for Equator finance for new coal-fired power plants and other new fossil fuel infrastructure, even though scientists have made clear that these are incompatible with limiting global temperature rises to 1.5 degrees…

Looking beyond these four improvement areas, the new Equator Principles again fail to deal with long standing shortcomings around transparency and accountability, with these topics deferred to a to be established new ‘operations working group’ and still to be developed ‘guidance notes’…

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26 November 2019

Updated version of Equator Principles released while Standard Chartered takes up new leadership role

Author: Equator Principles Association

“A strengthened Equator Principles, and new leadership for the Association”, 18 November 2019

… the updated version of the Equator Principles (EP), EP4, was adopted by the Equator Principles Association and represent the fourth iteration of the Principles since their inception in 2003.

The intent of the Principles remains to set the financial industry benchmark for determining, assessing and managing environmental and social risk in Project Financing.

Following the commitment by the Association (in October 2017) to review and update the Eps… the Association has undertaken a process involving extensive dialogue with a wide variety of stakeholders – including its own EPFIs, EPFI clients, industry bodies, NGOs, civil society and other investors…

…  Amendments and new commitments have been made in relation to the following topics:  human rights, climate change, Indigenous Peoples and biodiversity…

These milestones come at the same time as the Association hands over leadership: Standard Chartered will be the new chair of the Equator Principles Association until 2021…

 [Also referred to Standard Bank, ING Bank, and JP Morgan]

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15 November 2019

315 civil society groups renew call for Equator Principles Financial Institutions to stop funding climate disaster & abuses of Indigenous rights

Author: Johan Frijns, BankTrack, on behalf of 315 civil society groups

“Letter to: Mr Beck, Chair of Steering Committee Equator Principles Association; All Equator Principles Financial Institutions (EPFIs)”, 13 November 2019

...Equator Principles Financial Institutions (EPFIs) will meet in Singapore at the annual meeting of the Equator Principles Association (EPA), to decide...commitments under the proposed new Equator Principles, EP4. [The] decision…taken at your 2017 Annual Meeting in São Paulo after 270 organisations and 130,000 individuals signed the Equator Banks Act petition, [asked] your institutions to ‘Stop financing climate disasters’ and to ‘Respect Indigenous Peoples’ rights and territories’…, [reflecting] our deep concern over the ongoing financing…of coal, oil and gas and infrastructure projects.

[The petition]…was triggered when in 2016 no fewer than 14 EPFIs provided finance for the Dakota Access Pipeline in the United States…, leading to well-documented human rights violations. [If such] projects…can get financed under the Equator Principles,…communities and the planet continue to be exposed to major environmental and human rights risks,…but also [it poses] reputational and financial risks [to Equator banks]…

One week before the 25th Conference of the Parties to the UN Climate Treaty,…your two year drafting process for EP4 will…end. [T]he final draft…has not been shared with stakeholders. [If] the final EP4 closely resembles the draft…, it will not put an end to financing…climate disaster projects,…ensure the rights of Indigenous Peoples, [and will not address]…shortcomings [in] transparency and accountability.

Our organisations would consider such an outcome unacceptable,…in a world increasingly prey to an ever-accelerating climate crisis, with forests disappearing…, tens of thousands of animal and plant species disappearing…, with poverty and inequality rising and conflicts over control of land, water and resources deepening. [C]ontinuing with ‘business as usual’ will also not help EPFIs [to] meet the stated objectives of…adequately managing risks. [Our] organisations once more call upon your institutions to Act, with courage and ambition…[and] to ensure that the EP4…will contain clear, ambitious and courageous commitments and provisions that no longer allow the financing of projects that pose a direct threat to our world and to your future business, [but] will preserve it and help it thrive for future generations.

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