Who and where are the Equator Banks? - IILJ
Who and where are the Equator Banks? - IILJ
Who and where are the Equator Banks? - IILJ
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A particularly difficult assessment issue is raised by staged projects. Where<br />
<strong>the</strong> initial stages of a project, such as motorway projects, have not been <strong>the</strong><br />
subject of review in accordance with <strong>the</strong> Principles but current or future<br />
stages <strong>are</strong> so assessed, complications arise. <strong>Equator</strong> <strong>Banks</strong> at <strong>the</strong> early stage<br />
of <strong>the</strong> development <strong>and</strong> implementation of <strong>the</strong> Principles have tended to be<br />
pragmatic in <strong>the</strong>ir approach to staged projects. At least as far as <strong>the</strong> future<br />
stages of staged projects <strong>are</strong> concerned, <strong>the</strong> difficulty of financing <strong>and</strong><br />
syndication without some sort of framework for environmental <strong>and</strong> social<br />
review will mean that sponsors will, probably, have to adhere to <strong>the</strong><br />
Principles, although doing so may well involve a more detailed assessment<br />
than cursory examination of <strong>the</strong> cumulative impact of <strong>the</strong> various stages of<br />
<strong>the</strong> project.<br />
Similar difficulties may arise with regard to projects that have been a long<br />
time in planning before <strong>the</strong> adoption of <strong>the</strong> Principles <strong>and</strong> cannot be<br />
unwound simply. It remains to be seen how this will be addressed in light<br />
of <strong>the</strong> Principles.<br />
During <strong>the</strong> course of our survey, it was made clear to us that a number of<br />
<strong>Equator</strong> <strong>Banks</strong> had decided not to participate in loan syndication of certain<br />
projects. This was not because <strong>the</strong> bank considered <strong>the</strong> environmental or<br />
social impacts of a project to be unacceptable, but simply because it felt that<br />
<strong>the</strong> project did not fit <strong>the</strong> risk profile of its existing loan portfolio or it did<br />
not have <strong>the</strong> resources or expertise to assess <strong>the</strong> project adequately in <strong>the</strong><br />
time given by <strong>the</strong> sponsor or arranging bank to come to a conclusion.<br />
O<strong>the</strong>r <strong>Equator</strong> <strong>Banks</strong> may feel that, because of <strong>the</strong>ir greater resources or<br />
expertise in projects of a certain type, an adequate assessment of <strong>the</strong> project<br />
could be made in <strong>the</strong> time available or that a project of a particular type can<br />
be accommodated within its loan portfolio.<br />
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Some NGOs <strong>are</strong> concerned about ‘categorisation creep’ <strong>where</strong> <strong>the</strong> <strong>Equator</strong><br />
<strong>Banks</strong>, under pressure from sponsors <strong>and</strong> loan arrangers, <strong>and</strong> given <strong>the</strong><br />
scope for subjectivity in categorisation, may be tempted to place projects in<br />
lower risk categories to reduce costs associated with carrying out social <strong>and</strong><br />
environmental impact assessment. Our own impression is that projects <strong>are</strong><br />
not systematically downgraded in this way by <strong>Equator</strong> <strong>Banks</strong>.<br />
Many issues addressed by <strong>the</strong> Principles involve some element of<br />
judgement as to which equally qualified leading professional advisers may<br />
legitimately hold different opinions. That professionals acting for banks or<br />
sponsors may disagree does not necessarily involve a degree of artificial<br />
manipulation of categorisation of a project.<br />
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