Are you finding it overwhelming to track all the changes in ESG standards?  We’ve broken down the changes in one of the most relevant sets of guidelines for international lenders and businesses – the Equator Principles (EPs) – into one simple diagram.

The EPs are a risk management framework adopted by financial institutions (EPFIs) for determining, assessing and managing environmental and social risk in projects. They define a minimum standard for due diligence and monitoring to support responsible risk decision-making.

The public comment periods for the most recent EP revisions (EP4) have concluded and the EPFIs will soon agree to final changes. In Acorn International’s experience as industry environmental, social and governance (ESG) experts as well as lender independent and social consultants (IESC), the key changes that will be most notable for borrowers on international project finance and similar transactions are related to:

• – Scope of applicability of the Principles
• – Human rights due diligence and Free, Prior and Informed Consent (FPIC) where there may be impact to indigenous people, and
• – Climate change risk assessment, alternative analyses and disclosure requirements.

Additional detail on the proposed changes and the significance of each is shown in the figure below.