Equator Principles set bank responsibility standards.

• Author: Chafe, Zoe
• Position: Environmental Intelligence

In June, the international finance community unveiled the Equator Principles, a set of voluntary environmental and social responsibility guidelines designed to shape development projects around the world. The principles are based on policies created by the World Bank's private investment subsidiary, the International Finance Corporation (IFC), and will be applied to all participating banks' projects with capital costs over $50 million. Projects of this size account for about 97 percent (in dollar terms) of the investment currently planned.

The Equator Principles create standards--on the use of renewable resources, socioeconomic impacts, involuntary resettlement, impact on indigenous communities, efficient use of energy, and pollution prevention--which banks may use to judge potential investment projects. If a project has high social or environmental risks, the finance institution pledges to involve stakeholders in preparing an initial environmental assessment and developing mitigation and monitoring plans. The IFC estimates that the Equator Principles will apply to over $100 billion in global investment over the next 10 years. Named to reflect the global scope of the standards, the principles may be adopted by any interested bank. Fourteen banks in nine countries have done so, and supporters are expecting the guidelines to become well recoginized within the international finance community. "We do expect an adoption...