The Equator Principles are a set of voluntary social and environmental guidelines by which approximately 77 banks and other financial institutions (known as the Equator Principles Financial Institutions (EPFIs)) have agreed to be bound in making project finance decisions.

EPFIs can refuse to provide loans to projects where the borrower is unable or unwilling to comply with their social and environmental policies and procedures.

On 13 August 2012 the Equator Principles Association released a draft of the third version of the Equator Principles (EP3) for stakeholder consultation and public comment. The consultation period closed on 12 October 2012.

The draft will be of interest to banks as it extends the scope of the EP to project-related corporate loans and bridge loans and strengthens reporting and transparency requirements. In addition, the draft includes:

  • New requirements relating to managing impacts on climate.
  • Changes reflecting the recent update of the International Finance Corporation Performance Standards
  • A greater emphasis on human rights considerations in due diligence, combined with an acknowledgement of the UN 'Protect, Respect and Remedy Framework for Business and Human Rights'.

The Equator Principles Association will review comments received during the consultation period and will prepare a final revision of the Equator Principles which is expected to be issued in January 2013.