Norton Rose Fulbright is advising the Equator Principles Association (EPA) as counsel for the legal review of the fourth Equator Principles (EP4), which are now succeeding in broader adoption and impacting in-house and others beyond the finance industry.

Responding rapidly

The Norton Rose Fulbright team explained, “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.” 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.”

101 financial institutions

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.