Equator Principles

by Alex Monk

On 21 July 2014, the Equator Principles Association (EPA) published an Implementation Note on the Equator Principles 2013. The document contains information to support the understanding of the requirements in, and implementation of, the Equator Principles (EPs).

The EPs are a framework of voluntary social and environmental guidelines used to identify, assess and manage the environmental and social risks of project finance and certain corporate loan transactions. Approximately 80 banks and other financial institutions (known as the Equator Principles Financial Institutions (EPFIs)) have agreed to be bound by the EPs committing them not provide finance to clients not able to comply with their requirements. The EPA estimates that more than 70% of international project finance related debt in emerging markets transactions are subject to the EPs. The latest (third) version of the Equator Principles was released in May 2013 and (among other things) extended the scope of the EPs (originally covering project finance advisory services and project finance) to cover project-related corporate loans greater than $100 million and a term of at least two years and bridging loans that will be refinanced by project finance or by a project-related corporate loan.

Module I of the Implementation Note aims to provide further support to EPFIs and stakeholders by addressing specific questions on, and approaches to, project-related corporate loans and bridge loans. It includes:

  • Examples of corporate loans that fall within and outside the scope of the EPs.
  • Examples of bridge loans that fall within and outside the scope of the EPs.
  • Examples of other product types that fall within and outside the scope of the EPs.
  • Clarification of the differences in how the EPs are applied to project-related corporate loans and project finance.

Modules II and III provide further clarity on the EPs concerning climate change and reporting obligations respectively.

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About the contributor

  • Alex Monk Partner

    Alex has a wide finance transaction experience with a particular focus on trade and commodity finance transactions acting for banks, financial institutions and corporates.

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