Banks adopt sustainability principles for financing development projects

On 4 June, ten leading international banks announced the adoption of the “Equator Principles”, a voluntary set of guidelines for managing social and environmental issues related to the financing of development projects.

On the initiative of the World Bank's International Finance Corporation, leading international banks, including ABN AMRO Bank, N.V., Barclays PLC, Citigroup, Inc., Credit Lyonnais and Credit Suisse Group, will apply the Equator Principles to all loans for projects with a capital cost of USD 50 million or more. In granting a loan, these banks agree to only accept projects whose sponsors agree to undergo a screening process aimed at ensuring that projects are developed in a socially responsible manner and according to sound environmental management practices.

The Equator Principles were created in response to criticism coming from environmental and social pressure groups that bank loans have often contributed to the contamination and impoverishment of the developing world. Some of these activists while cautiously welcoming the launch of the initiative, have remained sceptical regarding its implementation.

In the meantime, a number of other large banks have expressed interest in signing up to the Equator Principles and supporters expect the guidelines to become the industry standard in the coming years.


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