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October 26, 2022

CSOs put banks on notice to commit on climate, nature and human rights

In the lead up to the Equator Principles Association’s 2022 Annual General Meeting, BankTrack and the Women’s Earth and Climate Action Network (WECAN), supported by 25 other civil society organisations, communicated to the Association to make the case for the 137 signatory financial institutions across 38 countries to start a process that will lead to an important and necessary expansion of the scope of risks that the Equator Principles (EPs) set out to manage. 

The Equator Principles are an environmental and social risk management framework launched nearly twenty years ago. It is a framework for adopting institutions to "effectively identify, assess and manage environmental and social risks when providing project-related finance."

Since then, there have been four iterations of the Principles, with the most recent coming into effect from October 2020.

Within this time, the world has seen the rapid acceleration of the climate crisis, further destruction of the planet’s remaining intact ecosystems, continued threats to Indigenous and other communities, and more recently the emergence of Covid, showing the risks of facing ever new pandemics.

Calling for a renewed commitment 

The open letter argues that the Principles have not done enough to tackle these global crises and, in fact, many of the projects financed under the Principles over the past twenty years have directly contributed to the worsening of these crises, which leads to ever growing global risks.

Our organisations are convinced that without an expansion of scope and a corresponding strengthening of commitments of all EPFIs in the realms of climate and energy, nature and biodiversity, human and Indigenous rights and pandemic prevention, the Equator Principles will not shield adopting banks from risks associated with providing project related finance.

This represents a failure of the Principles to fulfill their mission and remain relevant within our changing society.

Moreover, we fear that merely proceeding with business as usual after their 20th anniversary in 2023 will lead to a continued stream of ‘Equator compliant’ lending to projects and companies that exacerbate risks to the planet’s climate, to nature and to communities, and eventually to banks as well.

Consequently, we are calling upon the EPA to make a renewed commitment on climate, nature, pandemics and human and Indigenous rights, before the Principles’ 20th anniversary next year.  

Our call to action makes the case for the EPA to start a process that will lead to an important and necessary expansion of the scope of risks that the Equator Principles (EPs) set out to manage.

Our recommendations to the association include an end to the financing of fossil fuel projects and of projects located in highly biodiverse areas under the Principles, the full respect and protection of human and Indigenous rights, requirements for ‘pandemic risk assessment’ and establishing an initiative-level grievance mechanism.

After many years of engagement with the EPA, and most recently a civil society call to implement concrete actions on climate, biodiversity and human rights in the lead up to the climate and biodiversity summits in Glasgow and Kunming, civil society has been disappointed with the lack of ambition shown by the Association and its members.

The response received from the EPA Steering Committee following the previous annual meeting fell far short of meeting the urgency of the multiple risks and crises of these times. In the meantime, the global situation has only worsened and immediate action to tackle the multiple crises with which we are confronted is needed now more than ever.

Financial institutions should not forget that their business depends on well-functioning societies embedded in stable ecosystems, which are being increasingly jeopardized by finance for projects that undermine the basic systems of life.

In the lead up to its 20th anniversary, the EPA must show its leadership and dedication to ecological sustainability and respect for human and Indigenous rights, as we face the unprecedented challenges of a world plunging further into climate and ecological crises.

Read the full letter here.

Osprey Orielle Lake is Executive Director at Women’s Earth and Climate Action Network (WECAN).

Hannah Greep is Campaign Lead for Banks and Nature at BankTrack.

Image by Patrick Perkins