No U-turn allowed. NGOs call upon banks to save Equator Principles as support for Caspian oil pipeline threatens credibility
23 January 2004
Since June 2003, nineteen leading banks have signed on to the Equator Principles, committing themselves to apply the social and environmental policies of the IFC, the World Bank’s private arm, in all their project lending.
While cautiously welcomed by NGOs as a first step in a long process leading to socially and environmentally respon-sible banking practices, the continued support of Equator banks for projects such as BTC has led to serious doubts about the viability of the Principles. At least eight EP banks, lead by ABN AMRO, are participating in the BTC project, which, according to NGO research, is in total or partial breach of five EP referenced IFC standards, on at least 127 counts.
The NGOs, who recently established the BankTrack network, presented EP banks with a elaborate list of recommen-dations on how to best act upon the Principles, and move beyond the limited framework they provide. The recommen-dations include a commitment to full information disclosure and transparency, the establishment of a joint Independent Accountability Mechanism, and moving beyond IFC standards in those sectors where these are not best practice.
Andrea Baranes of CRBM, Italy commented; “EP Bank support for BTC has put the very credibility of the Principles at stake; having such ambitions and at the same time allow for these kind of projects to continue makes them virtually meaningless”
Michelle Chan of Friends of the Earth US added “The Equator Principles, as a voluntary set of principles, cannot depend solely on peer group pressure to succeed. Independent monitoring and compliance mechanisms must be put in place. Signatories cannot expect to receive much public credit without accountability procedures that ensure that banks practice what they preach on the ground”.
Said Andreas Missbach of Berne Declaration; “Signing on to the Equator Principles must signify an end to ‘business as usual’ for banks, reflected in a change in their portfolios and lending practices. EP banks should invest in, and capitalise on the potential good will created by the EPs. Any short term financial gains from signing on to a controversial project such as BTC will be insignificant compared to this future asset.”