The Equator Principles
The Equator Principles are a framework used by financial institutions to determine, assess and manage environmental and social risk in projects.
The EP are adopted and applied voluntarily by what’s known as “Equator Principles Financial Institutions”, or EPFIs. Approximately 90 EPFIs in 37 countries have officially adopted the EP, covering over 70 percent of international project finance debt in emerging markets.
ING was one of the 10 first adopters of the EP in 2003 and was since elected chair of the Steering Committee in 2012—2014, where we played a key role in finalising its second review update. We actively advocate and enforce the EP, as we recognise their ability to positively contribute to society.
ING has a well-established Environmental and Social Risk Framework (ESR Framework) that lists the standards we expect of clients and ourselves, including application of the EP.
Applying the Equator Principles (EP)
As an Equator Principles Financial Institution (EPFI) we don’t provide project finance or project-related corporate loans to clients that are unable to or choose not to comply with the principles.
We also implement the EP in our internal environmental and social policies, procedures and standards. These are embedded in our ESR Framework, and require involvement of the following three banking areas:
- Front Office: The departments that originate transactions and have direct contact with clients or sponsors.
- Risk Managers: The departments that provide control over Front Office activities and generally can sign off on the environmental and social impacts for ’low-risk’ EP deals.
- Environmental and Social Risk: The dedicated department within risk management that assesses environmental and social impacts associated with ’high-risk’ transactions.
An example of how the Equator Principles form part of our transaction assessment:
The full text of the Equator Principles can be found at www.equator-principles.com.
Read more about ING’s approach to the Equator Principles and 2014 EPIII Reporting.