Asia Society Policy Institute

Requirements for financial institutions that are members of the Equator Principles Association (EPA) to follow and report on the projects that they support. Guidance for financiers, developers, and contractors to implement within their environmental and social policies, procedures, and project standards.

Offers a common baseline and risk management framework for financial institutions, so they can identify, assess, and manage environmental and social risks when financing projects.

Developers and Contractors (originally, “the Client”) must:

• Abide by host countries’ rules and regulations related to environmental and social issues for designated countries. A list of these countries can be found here.
• Comply with applicable provisions in the International Finance Corporation’s (IFC) “Performance Standards on Environmental and Social Sustainability” and “Environmental, Health and Safety Guidelines (EHSGs),” in addition to host countries’ laws and regulations for non-designated countries.

Developers (and Contractors, where applicable) must:

• Engage affected communities, workers, and other stakeholders in an ongoing, structured, and culturally appropriate way for Category A and B projects.
• Conduct an informed consultation and participation process that is free from external manipulation, interference, coercion, and intimidation for Category A projects.
• Comply with the rights of and protections for Indigenous communities.
  • Undertake a process of informed consultation and participation that abides by host countries' laws and regulations.
• Obtain Indigenous peoples’ Free, Prior and Informed Consent (FPIC) for projects that impact their lands and natural resources, significantly impact their cultural heritage, use their cultural heritage for commercial purposes, and require relocation.
• Establish and inform stakeholders of grievance mechanisms that receive and resolve concerns about Category A and B projects’ environmental and social performance.
  • These mechanisms must resolve concerns promptly and use an understandable and transparent consultative process that is free, readily accessible, and culturally appropriate without retribution to complainants.

Equator Principles Financial Institutions (EPFIs) must:

• Categorize projects based on their potential environmental and social risks and impacts, including those related to human rights, climate change, and biodiversity. Their categorization system is based on the IFC’s environmental and social categorization system. These institutions assign projects to one of the following three categories:
  • Category A projects have significant adverse environmental and social risks and/or impacts that are diverse, irreversible, or unprecedented.
  • Category B projects have limited adverse environmental and social risks and/or impacts that are few in number, generally site-specific, largely reversible, and readily addressed through mitigation measures.
  • Category C projects have minimal or no adverse environmental and social risks and/or impacts.

Developers (and Contractors, where applicable) must:

• Conduct an appropriate environmental and social impact assessment (ESIA) that addresses relevant environmental and social risks, as well as the scale of impacts for proposed projects.
  • Assess potential adverse human rights impacts and climate change risks as part of the ESIA.
  • Propose measures to minimize, mitigate, and — where residual impacts remain — compensate/offset/remedy the risks to and impacts on workers, affected communities, and the environment.
• Prepare an environmental and social management plan (ESMP) to address issues raised in the ESIA and propose actions required to comply with applicable standards.
  • Agree with EPFIs on an Equator Principles Action Plan (EPAP) when host country standards fall short.
• Share ESIA documents with affected communities and other stakeholders in the local language(s) and in a culturally appropriate manner.
  • These assessments must include the results of the stakeholder engagement process.
• Retain an independent environmental and social consultant to review the ESIA process, including documentation for the ESMPs, environmental and social management systems (ESMS), and stakeholder engagement for Category A and B projects.
  • These consultants must ensure proper due diligence and compliance with the Equator Principles.
• Disclose a summary of the ESIA for each project online. It should include human rights impacts and climate change risks.
• Retain an independent environmental and social consultant to monitor and report on Category A and B projects’ compliance with the Equator Principles.
• Report greenhouse gas (GHG) emissions levels publicly during the operations phase for projects with annual emissions of more than 100,000 tonnes of carbon dioxide (CO2).