The Equator Principles

Development, 2004, 47(3), (78–84) r 2004 Society for International Development 1011-6370/04 www.sidint.org/development

Dialogue

The Equator Principles: Drawing the line for socially responsible banks? An interim review from an NGO perspective

ANDREAS MISSBACH

ABSTRACT In June 2003 leading investment banks announced the adoption of the Equator Principles, a voluntary set of guidelines developed by the banks for managing social and environmental issues related to the financing of infrastructure projects. Andreas Missbach discusses the Equator Principles comparing them with a broader NGO-vision on sustainable finance (The Collevecchio Declaration). He shows that there are ways of implementing the Principles in order to make a difference. KEYWORDS project finance; safeguard measures; The Collevecchio Declaration

The role of banks in project finance

In the 1990s there was not only a dramatic change in the composition of North^South financial flows ^ private commercial flow outstripped governmental and multilateral development finance ^ but also a change in the way large infrastructure projects in the global south were financed. Private Financial Institutions entered into areas such as large dams, oil pipelines and large infrastructure project, which were previously financed by the World Bank and other multilateral development banks. The project finance departments of the large US investment banks and the European Banks copied their business model (like Credit Suisse First Boston,West LB and others) and developed new ways of financing those investments. For NGOs one of the most serious aspects of this change were those cases where the private banks stepped in after the World Bank decided not to finance a project because of environmental and social concerns. The OCP-Pipeline in Ecuador, the three gorges dam in China (which was financed through Chinese government agency bonds) and the Ilisu dam in Turkey (where UBS had a mandate as arranger until they...