The Equator Principles in the financial sector: an impact assessment

Considering the terror of the Amazon Rainforest burning as a direct result of economic pressures, global exploitation of people across an array of sectors, and climate change at the forefront of international agendas, the role of private financial institutions (PFIs) has come under attack. Due to their powerful influence and high levels of liquidity, their role in facilitating these situations through project financing has been debated. An attempted solution has been created by several financial institutions, following non-governmental organisations (NGO) protests regarding their roles in protecting environmental and social concerns, termed the Equator Principles (EPs). The EPs are a sustainable credit risk management framework, assisting in regulating, evaluating and supervising environmental and social risks globally to new projects financed by four financial products: project finance advisory services, project finance, project-related corporate loans and bridge loans. This framework is applied internally by institutions which are signatories, known as the Equator Principles Financial Institutions (EPFIs), operating across all industry sectors including oil and gas, power, mining and infrastructure.