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EP 2: the revised Equator Principles: why hard-nosed bankers are embracing soft law principles

2007; Taylor & Francis; Volume: 1; Issue: 2 Linguagem: Inglês

10.1080/17521440.2007.11427867

1752-1459

Paul Watchman, Angela Delfino, Juliette Addison,

Economic, financial, and policy analysis

This article discusses the Equator Principles in general. More specifically, it focuses on the revised Equator Principles, effective from July 2006, and compares those Equator Principles with the first set of Equator Principles. In reviewing the Equator Principles the article aims to achieve five, albeit modest, objectives:First, to provide a description and comparison of both sets of the Equator Principles and, where considered relevant, an explanation of the differences between each set and why they differ.Second, to outline the requirements of the Equator Principles for those Equator Banks and Equator Principles Financial Institutions which have adopted them and for borrowers who finance projects by way of borrowing which is subject to the Equator Principles.Third, to examine some of the reasons given by financial institutions for adopting the Equator Principles and the reasons given by other financial institutions for declining to adopt them.Fourth, to consider some of the issues which have arisen for lenders, borrowers and affected local communities or which have been raised by NGOs and civil society in respect of the implementation of the Equator Principles.Fifth, to assess the impact of the Equator Principles on the project finance market and in particular, on financial institutions, project sponsors and affected local communities and to question whether from any of these viewpoints, the Equator Principles by any measurement can be said to be a success or a failure.Finally, the article concludes that whilst there may be a number of outstanding technical and substantive issues which the Equator Principles Financial Institutions need to address, the Equator Principles may be described justly not only as a "shining beacon for responsible sustainable banking",2 but also as a catalyst for a shift in business values towards the development of real corporate responsibility.