Who and where are the Equator Banks? - IILJ

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= tÜ~í=ÇáÑÑÉêÉåÅÉ=Ü~îÉ=íÜÉ=bèì~íçê=mêáåÅáéäÉë=ã~ÇÉ=íç=íÜÉ= bèì~íçê=_~åâë\=EÅçåíáåìÉÇF= bèì~íçê=mêáåÅáéäÉë=ÇìÉ=ÇáäáÖÉåÅÉ= What should the Equator Bank do by way of due diligence? NGOs have questioned whether, and to what extent, Equator Banks should rely on the work done by the sponsor or the advisers to the sponsor. If Equator Banks rely on such studies, it is clear that they must carefully examine the scope of the due diligence to ensure that it covers all relevant environmental and social issues and that sufficient time and resources were devoted to it. There is also a degree of cynicism shared by NGOs as to whether sponsors are being wholly transparent and comprehensive in their disclosures about projects and whether advisers who may have an existing relationship or hope for a future relationship with sponsors are or can be truly independent and objective. This is a criticism that can be levelled at all environmental assessment systems which rely on sponsor-sourced material. The difference, NGOs might say, is that those systems are ultimately reviewed by a public authority that is politically accountable, whereas that is not true in the case of a private sector bank. On the other hand, assessment by the Equator Banks of the environmental and social impact of a project tends to take place after or, at best, alongside assessment by a public authority. However, it is also true that sponsors or lenders sometimes like to have funding from a bilateral or multilateral lender or an export credit agency as a form of legitimisation of the project and this would involve clearance under the lending policies of the relevant institutions. Critical questions for banks arranging finance or members of a bank syndicate are: which of the banks involved in arranging or syndicating a project loan should carry out the Technical Bank or Environment Bank function and, as part of that role, lead the Principles due diligence and subsequently monitor the construction and operation of the project? We believe this role is critical to the successful implementation of the Principles as the reputation of all participating banks is dependent on the Environment Bank, both during the project assessment stage and when the Environment Bank is charged with monitoring the construction and operational stages of the project. The Environment Bank responsibilities should include: • advising the other banks whether the pre-condition requiring compliance with the Principles has been satisfied and monitoring compliance with the Environmental Management Plan (EMP) required for the project; and NQ= bèì~íçê=mêáåÅáéäÉë=pìêîÉó=OMMR=Ó=pìãã~êó=oÉéçêíW=m~êí=f=Ó=qÜÉ=_~åâë= cêÉëÜÑáÉäÇë=_êìÅâÜ~ìë=aÉêáåÖÉêI=cÉÄêì~êó=OMMR=
= tÜ~í=ÇáÑÑÉêÉåÅÉ=Ü~îÉ=íÜÉ=bèì~íçê=mêáåÅáéäÉë=ã~ÇÉ=íç=íÜÉ= bèì~íçê=_~åâë\=EÅçåíáåìÉÇF= • having special responsibility for protecting the reputation of each of the participating banks. Some Equator Banks are adamant that it is inappropriate for a non-Equator Bank to lead the Principles due diligence, while others are reluctant to question that bank’s commitment to carrying out a thorough Principles due diligence just because it has not itself adopted the Principles. Nonetheless, a non-Equator Environment Bank leading a Principles due diligence on behalf of Equator Banks, which has by definition not adopted the Principles, does look distinctly odd. If the Principles aim at providing more robust projects and protection of the reputation of banks from public criticism by stakeholders, it is difficult, in principle at least, to understand why Equator Banks, even if they retain a veto or have weighted voting rights, would concede the Environment Bank role to a bank which does not share their ambitions for, belief in or commitment to the Principles. NR= bèì~íçê=mêáåÅáéäÉë=pìêîÉó=OMMR=Ó=pìãã~êó=oÉéçêíW=m~êí=f=Ó=qÜÉ=_~åâë= cêÉëÜÑáÉäÇë=_êìÅâÜ~ìë=aÉêáåÖÉêI=cÉÄêì~êó=OMMR=
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Who and where are the Equator Banks? - IILJ

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