Tuesday, November 20, 2007

The Equator Principles: A toddler finds its feet, but still takes an occasional tumble


In four years the Equator Principles have made real progress, but according to critics, still suffer from a lack of clarity and definition, particularly regarding climate change.

The Equator Principles, a four-year-old initiative set up by big banks to consider the social and environmental impacts of global project finance, now regulate more than 85% of this niche market, according to the EPs' statistics.

Although small in global finance flow terms, project finance is a high profile business for both banks that arrange the money, and the companies who set up the deals and run the projects on the ground. While the economic and political risks of oil, gas and mining projects around the world have always been significant, in modern times NGO campaigns have added real reputational risk to the financing mix.

Based on social and environmental impacts, which often have unintended economic and development consequences, NGO campaigns against big projects such as the BP led Baku-Tbilisi-Ceyhan Turkish oil pipeline and the formerly Shell-led Sakhalin II oil and gas project have attracted considerable attention.

See full Article.