“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“It is outright astonishing that a process that set out to make the outdated 2013 version of the Equator Principles future proof, taking into account the outcomes of the 2015 Paris climate agreement, which took two years to complete and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’…