Equator Principles (EP)

Banks that adopt the Principles commit to apply them to qualifying projects, such as mines, pipelines, dams and power plants. The lender first classifies the project by risk level, then requires an environmental and social assessment, an action plan, stakeholder engagement and a grievance mechanism for affected people. Higher-risk projects face further steps, including independent review and, in some cases, free, prior and informed consent for Indigenous communities. Covenants in the loan agreement let the lender act if the borrower breaches the plan, and signatory banks report each year on how they applied the Principles. The framework is based on the standards of the World Bank group's private-sector arm, the International Finance Corporation. For a borrower, the practical effect is that lenders in different countries ask for much the same assessment work.

Before arranging finance for a new oil pipeline, a lender applying the Equator Principles rates the project high risk, appoints an independent consultant to review the borrower's impact assessment, and requires a resettlement plan and a community complaints channel before the loan is signed. The loan agreement lets it stop disbursements if the plan is ignored.