Norton Rose Fulbright advises Equator Principles Association

Norton Rose Fulbright has advised the Equator Principles Association (EPA) as counsel for the legal review of the fourth Equator Principles (EP4), published today, 18 November 2019.

The Equator Principles (EPs) are a sustainability risk management framework for projects financed by the financial institutions that have adopted the Equator Principles (EPFIs) but in practice are being adopted more widely. The EPs provide a framework and a minimum standard for financial institutions to identify, assess and manage the environmental and social risks and impacts of projects both prior to entering into project financing documentation as well as throughout the project lifetime.

The EPs apply globally across all industry sectors and are applicable to certain financial products (subject to value thresholds) offered by the EPFIs. Currently the EPs have been adopted by 101 financial institutions across 38 countries.

EP4 strengthen the requirements for EPFIs to consider the potential environmental and social risks and impacts of projects mainly in the area of human rights, climate change and biodiversity.

The main areas of development, acknowledging that the EPs can contribute to delivering on the objectives and outcomes of the United Nations Sustainable Development Goals, are:

• broadening the scope of financial products and projects that are subject to the Equator Principles
• clarifying a commitment of the EPFIs to fulfil their responsibility to respect Human Rights in accordance with the UN Guiding Principles on Business and Human Rights;
• introducing a requirement to conduct a Climate Change Risk Assessment in accordance with the Recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD); and
• progressing the requirements related to the Free, Prior and Informed Consent of affected Indigenous Peoples.

For further information about the changes, visit Equator Principles: Version 4.

The Norton Rose Fulbright team that advised the EPA was led by partners Milana Chamberlain (London), Ray Chartier (Calgary), Bob Comer (Denver), Gavin Scott (Brisbane), and Tina Costas (Durban).

The Norton Rose Fulbright team commented:

“Sustainability is a primary concern for all major institutions and corporations. Environmental and social issues are moving from the remit of corporate and social responsibility departments into the portfolio of Chief Risk and Compliance Officers and General Counsels and corresponding risks are increasingly treated as legal and financial risks of our clients. The updated project-related sustainability framework in the form of EP4 is a step towards the development of better understanding of and focus on the most pressing environmental and social issues in projects.”

On the occasion of the launch, the Chair of the EP Association Steering Committee, Nigel Beck of Standard Bank, said:

“For 15 years, the EPs has been the leading framework insuring that the environmental and social impacts of large-scale project finance deals are minimised and managed responsibly. EP4 responds to a rapidly changing sustainable finance landscape and pushes our members further than before."

Norton Rose Fulbright advises clients across all sectors on ESG risks and compliance measures, helping businesses manage their risks more effectively while becoming more competitive in the market. The firm has extensive knowledge of sustainable performance-related laws and regulations, standards and initiatives and members of its global ESG group are able to advise clients on fulfilling their corporate ESG commitments.