On November 18, 2019, following an extensive consultation, the Equator Principles Association (EPA) released an updated version of the Equator Principles (EPs). Version 4 includes revisions to scope by reducing the value threshold for certain Project-Related Corporate Loans, adding certain refinancing and acquisition financings and expansions and upgrades and clarifying that supplier credit export finance is excluded. In addition, version 4 clarifies that human rights, climate change and biodiversity must be covered by the environmental and social review and due diligence.
Having existed for over 15 years and having over 100 adhering financial institution members (EPFIs) from 38 countries, the EPs are among the best-known and most widely used criteria for the identification, assessment and management of environmental and social factors for large infrastructure and industrial project investments.
Version 4 will become mandatory and effective from July 1, 2020; however, EPFIs are encouraged to adopt it prior to then. Additional interpretative guidance is expected to be issued in 2Q2020. Responding to criticism that version 4 does not address some of the issues raised in the consultative process,1 the EPA has suggested that, among others, the following are priority areas for further consideration:
- Strengthening accountability of EPA members
- Improving transparency and reporting
- Considering the feasibility of expanding the scope of the EPs to non-project financial products
- Handling grievances through governance rules updates
- Having a working group further consider access to remedy.