The Equator Principles (EPs) are a framework used by banks for assessing and managing environmental and social risk when financing large infrastructure projects.
Banks that adopt the EPs commit to "ensure that the projects they finance and advise on are developed in a manner that is socially responsible and reflects sound environmental management practices". They "recognise the importance of climate change, biodiversity, and human rights, and believe negative impacts on project-affected ecosystems, communities, and the climate should be avoided where possible". Projects financed ‘under the EPs’ must meet the requirements of the Performance Standards of the International Finance Corporation (IFC), the private arm of the World Bank, or local legal requirements that are considered equivalent or exceeding these standards. Adopting banks promise to not finance projects which do not comply with the EPs.
Banks apply the EPs first and foremost out of a well understood self-interest, as they need to properly understand, assess and mitigate all risks that may impact on the profitability of a project, and therefore on the repayment of the finance provided. The positive benefits that may result from this for affected communities and for the environment are of secondary importance.
The EPs are currently adopted by 98 financial institutions, mostly banks, from 37 countries. Though adoption is voluntary, the EPs are considered binding by all banks that have adopted them. Every adopting bank becomes a member of the Equator Principles Association (EPA), the body tasked with the management, administration and development of the EPs. The EPA is governed by a Steering Committee of ten banks, currently chaired by Standard Bank of South Africa.