Two years ago, In November 2017, over ninety of the world's largest banks promised to strengthen their joint commitments under the Equator Principles, a set of rules for banks on how to finance big infrastructure projects in a socially and environmentally responsible manner.
Their decision to revise the Equator Principles came after 270 organisations and 130,000 individuals supported a petition by the ‘Equator Banks Act!’ coalition, asking Equator banks to stop financing ‘climate disaster projects’ (coal, oil and gas projects) and to fully respect Indigenous Peoples' rights and territories. The petition was launched following Equator bank financing for the Dakota Access Oil Pipeline in the United States, illustrating that the Equator Principles were no guarantee for preventing such disaster projects from proceeding.
This coming November 18-20 2019, the Association of Equator banks will decide at their annual meeting in Singapore what their commitments under the revised Equator Principles (‘EP4’) will look like.
Worryingly, the draft EP4 points towards proceeding with ‘business as usual’. If the final EP4 reflects this draft, it will not put an end to Equator banks’ financing of climate disaster projects, not comprehensively secure the rights of Indigenous Peoples, and not deal with other major shortcomings of the Equator Principles.
For the ‘Equator Banks Act!’ coalition, ‘business as usual’ is not an acceptable outcome of this revision process. The annual meeting in Singapore is the last chance for Equator banks to get it right: to step up their commitments and break away from disastrous finance practices, and to ensure that the Equator Principles truly work for people and planet.
We therefore call upon your organisation to endorse the open letter below, asking Equator Banks to Act with Ambition and Courage, by publishing new Equator Principles that will no longer allow the financing of disaster projects.
The letter below has been delivered to all Equator Banks on Wednesday November 13, 2019. You can still support this letter until Wednesday, November 20, 2019. Thank you!
To all Equator Principles Financial Institutions (EPFIs),
This November 18-20, your institutions will meet in Singapore at the annual meeting of the Equator Principles Association (EPA), to decide on your commitments under the proposed new Equator Principles, EP4.
As you will recall, the decision to revise the Equator Principles was taken at your 2017 Annual Meeting in Sao Paulo after 270 organisations and 130,000 individuals signed the Equator Banks Act petition, asking your institutions to ‘Stop financing climate disasters’ and to ‘Respect Indigenous Peoples’ rights and territories’.
The petition reflected our deep concern over the ongoing financing by EPFIs of coal, oil and gas extraction and infrastructure projects the world over, with many of these projects situated on the lands and territories of Indigenous Peoples that did not give permission for these projects to proceed. It was triggered when in 2016 no fewer than 14 EPFIs provided finance for the Dakota Access Pipeline (DAPL) in the United States, a project fiercely opposed by the Standing Rock Sioux Tribe and their allies because of the threat it posed to their water sources - and leading to well-documented human rights violations when these protests were quelled.
If projects such as DAPL can get financed under the Equator Principles, not only will communities and the planet continue to be exposed to major environmental and human rights risks, but also Equator banks themselves will remain exposed to precisely the sort of severe reputational and financial risks that application of the Equator Principles is supposed to prevent.
This month in Singapore, one week before the world meets in Madrid for the 25th Conference of the Parties to the Climate Treaty, your two-year long drafting process for EP4 will come to an end. We do not know what the final proposal will look like, as the final draft of EP4 has not been shared with stakeholders, not even with those that constructively engaged in this two-year discussion.
We do know, however, if the final EP4 closely resembles the draft EP4, it will not put an end to Equator banks’ financing of climate disaster projects; it will not comprehensively ensure the rights of Indigenous Peoples, and it will not deal with other major shortcomings of the Equator Principles that urgently need to be addressed, such as their limited scope and their lack of transparency and accountability. By and large, such an EP4 package would be ‘business as usual’ in the years to come.
Our organisations would consider such an outcome unacceptable.
We strongly believe that at the end of 2019, in a world increasingly prey to an ever- accelerating climate crisis, with forests disappearing at an unprecedented rate, tens of thousands of animal and plant species disappearing with them, with poverty and inequality rising and conflicts over control of land, water and resources deepening, for the Equator Principles to proceed with ‘business as usual’ is not an option.
‘Business as usual’ will see the continued financing by EPFIs of disaster projects that lead to and deepen these many crises. It will not deliver on the central promise of the Equator Principles that ‘negative impacts on project-affected ecosystems, communities, and the climate should be avoided where possible’ (EP3, preamble).
Continuing with ‘business as usual’ will also not help EPFIs operating in our volatile world meet the stated objective of the Principles of adequately managing risk. For this to happen it is necessary that the ‘comprehensive risk management’ concept at the core of the Principles is expanded, so that it no longer only focuses on managing risks posed by external circumstances to a project, but also encompasses all risks that a project will pose to communities, nature and climate, both locally and globally.
In short, financing coal power plants and other new fossil fuel infrastructure – which pose an immense risk to the world’s climate, and therefore to your future business – can no longer be considered an outcome of adequate risk management; it needs to stop. Financing projects on the lands and territories of Indigenous Peoples against their will, triggering sustained conflicts that also impact your future business, is no longer an option; it needs to stop. Financing projects that will destroy immense swathes of forests, and all life within them, leaving a barren infertile landscape where no future business can thrive is no longer an option; it needs to stop. And so on.
This is why, right before your Singapore meeting, our organisations once more call upon your institutions to Act, with courage and ambition.
We call on you to ensure that the EP4 you agree upon in Singapore will not be mere ‘business as usual’, but will contain clear, ambitious and courageous commitments and provisions that no longer allow the financing of projects that pose a direct threat to our world and to your future business, but will steer your investments towards projects that will preserve it and help it thrive for future generations.
Our organisations will carefully monitor the proceedings and outcome of your meeting, and take further action as we deem appropriate.
We wish you a successful meeting!
- For full list of signatories see here -
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