Who and where are the Equator Banks? - IILJ

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NGO criticism has focused not only on the Principles but also on the
perceived failure to apply the Principles, or inconsistent application by the
Equator Banks of the Principles.
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NGOs are critical of the Principles, which they see as selective. Although
based on the IFC model, they fail to reproduce some important elements of
it. For example, none of the extensive obligations as to disclosure and
transparency of IFC decision-making appear in the Principles. In the view
of some NGOs, the Equator Banks have merely ‘cherry-picked’ from the
model which the international community has adopted, leaving aside
important safeguards.
The Principles are limited to project finance above a $50m threshold. This
is seen by NGOs as potentially ignoring:
• the social and environmental impacts of activities funded by the
Equator Banks from general or non-project finance lending; and
• that the effect of projects under $50m may be much more harmful to
society and the environment than the effect of more costly projects.
The NGO community also has reservations about the scope of the
Principles. It is said, for example, that the Principles ignore climate change.
Certainly, there is no express mention of this important issue in the text of
the Principles (although it may be subsumed within the concept of
sustainable development). However, there are many other important
environmental and social issues which the Principles do not specifically
draw to the attention of the Equator Banks but which undoubtedly must be
addressed as part of the Principles assessment.
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Some NGOs are concerned about a lack of transparency of Equator Bank
decision-making. They observe that there is no mechanism for monitoring
that Equator Banks actually implement the Principles and that the Equator
Banks tend not to disclose what decisions they made or the basis of
decision-making. There is no mechanism for affected communities to have
recourse to the financial institutions, such as the availability of a dispute
resolution mechanism for third parties (such as the IFC Compliance
Advisory Ombudsman) in cases where standards are allegedly not being
met or implemented, as the loan documentation places most of the
responsibility in this respect on the borrower.
NGOs have criticised the Equator Banks for failure to explain why they
have supported or declined to support specific projects, sometimes
comparing their decision to support an allegedly unsustainable project
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