GUIDANCE NOTE

IMPLEMENTATION NOTE
THE EQUATOR PRINCIPLES

EQUATOR
PRINCIPLES
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THE EQUATOR PRINCIPLES

IMPLEMENTATION NOTE

Disclaimer: This document contains selected information and examples to support the
understanding of the requirements in, and implementation of, the Equator Principles and does not
establish new principles or requirements, nor does it create any rights in, or liability to, any person,
public or private. The information and examples are provided without guarantee of any kind, either
express or implied, including, without limitation, guarantees as to fitness for a specific purpose, non-
infringement, accuracy or completeness. The Equator Principles Association shall not be liable under
any circumstances for how or for what purpose users apply the information, and users maintain sole
responsibility and risk for its use. Equator Principles Financial Institutions should make
implementation decisions based on their institution’s policy, practice and procedures. In a situation
where there would be a clear conflict between applicable laws and regulations and any information
presented in this document, the laws and regulations of the relevant host country shall prevail.

September 2020
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CONTENTS

INTRODUCTION ........................................................................................................................... 5

MODULE I: SCOPE ........................................................................................................................ 6

WHAT TYPES OF PROJECTS AND TRANSACTIONS ARE WITHIN THE SCOPE OF THE
EQUATOR PRINCIPLES? ................................................................................................................... 6

PROJECT-RELATED CORPORATE LOANS ..................................................................................... 7

WHAT ARE EXAMPLES OF CORPORATE LOANS THAT FALL WITHIN THE SCOPE OF THE
EQUATOR PRINCIPLES? ................................................................................................................... 7

WHAT IS AN EXAMPLE OF A CORPORATE LOAN THAT IS OUTSIDE THE SCOPE OF THE

EQUATOR PRINCIPLES? ................................................................................................................... 8

WHAT INTERNAL SYSTEMS OR PRACTICES COULD THE EPFI ESTABLISH TO HELP IDENTIFY
WHICH CORPORATE LOANS ARE PROJECT-RELATED CORPORATE LOANS AND WITHIN THE
SCOPE OF THE EQUATOR PRINCIPLES? ........................................................................................... 9

IF A CORPORATE LOAN IS RELATED TO MULTIPLE PROJECTS, SITES OR USES, IS IT WITHIN

THE SCOPE OF THE EQUATOR PRINCIPLES?.................................................................................. 10

DOES THE EQUATOR PRINCIPLES APPLY TO A/B LOANS? IF YES, HOW DOES AN EPFI
DETERMINE IF IT MEETS THE FINANCIAL THRESHOLD?................................................................ 11

HOW SHOULD THE ‘B’ LENDER (AN EPFI) PROCEED WHEN THEIR LOAN TRIGGERS THE
EQUATOR PRINCIPLES AND THE ‘A’ LENDER (A NON-EPFI) HAS NOT CONDUCTED AN
ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT THAT IS FULLY IN ACCORDANCE
WITH THE EQUATOR PRINCIPLES? ................................................................................................ 12

ARE FPSO INSTALLATIONS, DRILL SHIPS, AND DRILL RIGS FINANCED BY PROJECT FINANCE
OR PROJECT-RELATED CORPORATE LOANS WITHIN THE SCOPE OF THE EQUATOR
PRINCIPLES? .................................................................................................................................. 12

IS RESERVE–BASED FINANCING WITHIN THE SCOPE OF THE EQUATOR PRINCIPLES? ................. 12

ARE BUYER CREDITS ALWAYS CONSIDERED PROJECT-RELATED CORPORATE LOANS AND

HENCE ALWAYS WITHIN SCOPE OF THE EQUATOR PRINCIPLES? ................................................. 13

WHAT IS AN EXAMPLE OF AN EXPORT FINANCE LOAN THAT IS WITHIN THE SCOPE OF THE
EQUATOR PRINCIPLES? ................................................................................................................. 14

ARE PROJECT BONDS WITHIN THE SCOPE OF THE EQUATOR PRINCIPLES? ................................. 15

WHAT QUALIFIES AS ‘LARGE-SCALE’ FOR A REAL ESTATE DEVELOPMENT? ................................. 15

1 September 2020
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ARE THERE DIFFERENCES IN THE APPLICATION OF THE EQUATOR PRINCIPLES TO

PROJECT-RELATED CORPORATE LOANS AND TO PROJECT FINANCE? .......................................... 15

HOW DOES THE EPFI CONDUCT AN INTERNAL REVIEW, IF IT IS DETERMINED, AS PER

PRINCIPLE 7, THAT AN INDEPENDENT CONSULTANT IS NOT REQUIRED? .................................... 16

UNDER PRINCIPLE 7 AND AS PART OF THE INTERNAL REVIEW, HOW AND TO WHAT
EXTENT CAN THE EPFI RELY ON DUE DILIGENCE PERFORMED BY A MULTILATERAL OR
BILATERAL FINANCIAL INSTITUTION OR AN OECD EXPORT CREDIT AGENCY? ............................. 16

BRIDGE LOANS ....................................................................................................................... 17

ARE BRIDGE LOANS THAT ARE REFINANCED BY A PROJECT BOND WITHIN THE SCOPE OF
THE EQUATOR PRINCIPLES? .......................................................................................................... 17

IS A BRIDGE LOAN, WHERE THE REFINANCING OR “TAKEOUT” STRUCTURE IS UNKNOWN,

WITHIN THE SCOPE OF THE EQUATOR PRINCIPLES? .................................................................... 17

WHAT IS AN EXAMPLE BRIDGE LOAN WITHIN THE SCOPE OF THE EQUATOR PRINCIPLES? ........ 18

DOES THE EQUATOR PRINCIPLES APPLY TO ONLENDING ACTIVITIES OR ‘TWO-STEP

LOANS’ WHERE THE EPFI LENDS TO AN INTERMEDIARY FINANCIAL INSTITUTION WHO
SUBSEQUENTLY FINANCES A PROJECT?........................................................................................ 19

ARE BRIDGE LOAN GUARANTEES OR LETTERS OF CREDIT FOR BRIDGE LOANS WITHIN THE
SCOPE OF THE EQUATOR PRINCIPLES? ......................................................................................... 19

HOW DO THE EQUATOR PRINCIPLES APPLY TO BRIDGE LOANS WITH A TENOR OF MORE
THAN 2 YEARS? ............................................................................................................................. 19

PROJECT-RELATED REFINANCE AND PROJECT-RELATED ACQUISITION FINANCE ........................ 20

ARE CORPORATE ACQUISITIONS, FINANCED VIA A LIMITED–RECOURSE STRUCTURE,

WITHIN THE SCOPE OF THE EQUATOR PRINCIPLES? .................................................................... 20

HOW TO HANDLE CASES WHERE PROJECTS GET SOLD/ACQUIRED WHEN UNDER

CONSTRUCTION OR PART WAY THROUGH DEVELOPMENT? ....................................................... 21

WILL A CASE WHERE ACQUISITION FINANCING OF EXISTING ASSETS (FINANCED UNDER

EP), WHERE MATERIAL EXPANSION AND/OR UPGRADE IS PLANNED OR ONGOING, BE
INTERPRETED AS REQUIRING FULL EP REVIEW?........................................................................... 22

IF REFINANCING WHERE CRITERIA 1 AND 3 ARE MET, BUT THERE HAS BEEN A MATERIAL
CHANGE IN SCALE OR SCOPE OF THE PROJECT, DO THE EQUATOR PRINCIPLES APPLY? ............. 22

DOES “ACQUISITION FINANCE” INCLUDE DIRECT EQUITY ACQUISITIONS OF PROJECTS OR

PROJECT COMPANIES BY EPFIS, WHERE THE EPFI ITSELF HAS EFFECTIVE OPERATIONAL
CONTROL? ..................................................................................................................................... 23

MODULE II: CLIMATE CHANGE .................................................................................................... 24

2 September 2020
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PRINCIPLE 2 AND ANNEX A: ALTERNATIVES ANALYSIS ............................................................. 24

WHAT ARE THE ALTERNATIVES ANALYSIS REQUIREMENTS?........................................................ 24

WHAT TYPES OF PROJECTS REQUIRE AN ALTERNATIVES ANALYSIS? ........................................... 25

DOES THE ALTERNATIVES ANALYSIS INCLUDE AN ANALYSIS OF FEASIBLE OPTIONS TO

REDUCE SCOPE 2 EMISSIONS? ...................................................................................................... 25

IS THE EPFI OR THE CLIENT REQUIRED TO PUBLICLY DISCLOSE THE ALTERNATIVES

ANALYSIS OR DETAILED TECHNICAL INFORMATION RELATED TO THE GHG ALTERNATIVES? ..... 25

PRINCIPLE 10: CLIENT REPORTING ON GREENHOUSE GAS EMISSIONS ...................................... 26

WHAT IS THE GHG EMISSION REPORTING REQUIREMENT?......................................................... 26

WHO IS REQUIRED TO REPORT ON A PROJECT’S GHG EMISSIONS? ............................................ 26

WHAT INFORMATION SHOULD BE DISCLOSED BY THE CLIENT? .................................................. 26

WHAT IS REPORTED WHEN THE PROJECT IS AN UPGRADE OR EXPANSION OF A FACILITY,

OR ONLY ONE PHASE OF A FACILITY? ........................................................................................... 27

WHAT METHODOLOGIES CAN BE USED TO CALCULATE THE GHG EMISSIONS? .......................... 27

HOW AND WHERE SHOULD THE CLIENT REPORT A PROJECT’S GHG EMISSIONS? ...................... 27

WHEN SHOULD EMISSIONS BE FIRST REPORTED AND WHAT IS THE DURATION OF

REPORTING?.................................................................................................................................. 27

ARE THERE EXCLUSIONS OR EXCEPTIONS FOR NON-REPORTING? .............................................. 28

DOES PUBLIC REPORTING ON AN AGGREGATE (CORPORATE) PORTFOLIO BASIS FULFIL

THE GHG REPORTING REQUIREMENT? ......................................................................................... 28

MODULE III: DESIGNATED COUNTRIES AND APPLICABLE STANDARDS.......................................... 29

WHAT HAS CHANGED FROM EP III (June 2013) TO EP IV (July 2020)? ......................................... 29

PROJECTS IN DESIGNATED COUNTRIES: HOW DO YOU DETERMINE THAT A PROJECT HAS

SPECIFIC RISKS THAT COULD BE ADDRESSED USING IFC PS AS GUIDANCE? ................................ 30

WHAT IS AN EXAMPLE PROJECT WITH SPECIFIC RISKS? ............................................................... 31

CAN YOU GIVE OTHER EXAMPLES OF ADDITIONAL STANDARDS AND REQUIREMENTS? ............ 31

MODULE IV: REPORTING ............................................................................................................ 32

PRINCIPLE 5: STAKEHOLDER ENGAGEMENT ............................................................................. 32

WHAT ASSESSMENT DOCUMENTATION SHOULD THE CLIENT DISCLOSE AND TO WHOM? ........ 32

3 September 2020
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PRINCIPLE 10: CLIENT REPORTING REQUIREMENTS ................................................................. 33

WHAT ASSESSMENT DOCUMENTATION SHOULD THE CLIENT DISCLOSE ONLINE? ..................... 33

WHERE SHOULD THE CLIENT DISCLOSE ITS ASSESSMENT DOCUMENTATION? ........................... 33

WHAT IS THE REQUIRED TIME FRAME, DURATION AND LANGUAGE FOR THE CLIENT’S
DISCLOSURE OF THE ASSESSMENT DOCUMENTATION? .............................................................. 33

PRINCIPLE 10 AND ANNEX B: EPFI REPORTING REQUIREMENTS ............................................... 34

WHICH TRANSACTIONS ARE SUBJECT TO THE EPFI REPORTING REQUIREMENTS IN

PRINCIPLE 10 AND ANNEX B OF THE EQUATOR PRINCIPLES? ...................................................... 34

IN PRINCIPLE 10, WHAT IS MEANT BY “APPROPRIATE CONFIDENTIALITY

CONSIDERATIONS”? ...................................................................................................................... 34

HOW CAN EPFI REPORTING DATA BE PRESENTED? ...................................................................... 35

WHAT ARE THE EPFI REPORTING REQUIREMENTS RELATED TO SUBMITTING PROJECT

NAME FOR PROJECT FINANCE DATA?........................................................................................... 38

SHOULD THE EPFI SEEK CLIENT CONSENT BEFORE SUBMITTING PROJECT NAME FOR
PROJECT FINANCE DATA TO THE EQUATOR PRINCIPLES ASSOCIATION SECRETARIAT? .............. 38

WHEN AND HOW SHOULD THE EPFI SEEK CLIENT CONSENT? ..................................................... 39

UNDER WHAT CIRCUMSTANCES WOULD THE EPFI BE EXEMPT FROM SUBMITTING

PROJECT NAME FOR PROJECT FINANCE DATA TO THE EQUATOR PRINCIPLES ASSOCIATION
SECRETARIAT? ............................................................................................................................... 39

WHEN IS THE EPFI REQUIRED TO SUBMIT DATA AND IMPLEMENTATION REPORTING AND
PROJECT NAME REPORTING FOR PROJECT FINANCE DATA TO THE EQUATOR PRINCIPLES
ASSOCIATION SECRETARIAT? ........................................................................................................ 39

WHERE AND WHEN DOES THE EQUATOR PRINCIPLES ASSOCIATION SECRETARIAT

PUBLISH PROJECT NAME FOR PROJECT FINANCE DATA? ............................................................. 40

IS THE EPFI REQUIRED TO DISCLOSE PROJECT NAME FOR PROJECT FINANCE DATA ON ITS
WEBSITE? ...................................................................................................................................... 40

IS THE ONE-YEAR GRACE PERIOD ON REPORTING FOR NEW ADOPTERS STILL APPLICABLE? ...... 40

GLOSSARY OF TERMS ................................................................................................................. 41

4 September 2020
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INTRODUCTION

This document comprises a series of modules containing information to support the implementation
of the requirements contained in the Equator Principles on scope, climate change (Principle 2 and
Annex A of the Equator Principles), Designated Countries and applicable standards (Principle 3), and
reporting (Principles 5, 10 and Annex B of the Equator Principles).

This document does not intend to establish new principles or requirements. Each Equator Principles
Financial Institution (EPFI) should make implementation decisions based on its institution’s policy,
practice and procedures.

Unless stated otherwise, all references to the ‘Equator Principles’ in this document relate to the
Equator Principles text dated July 2020.

Furthermore, the frequently used term ‘asset’ does not refer to the financial product Asset Finance.
In this document, the term ‘asset’ has a broader meaning and is used to describe the physical Project
e.g. a power plant, oil field etc.

Finally, it should be noted that the content in this document will be developed over time to reflect
the experience of EPFIs and clients, and in response to other changes affecting implementation (e.g.
regulatory developments, technological advances).

5 September 2020
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MODULE I: SCOPE

This module provides information and examples to support the understanding of what types of
Projects and transactions are within the scope of the Equator Principles.

Project-Related Refinance and Project-Related Acquisition Finance are new additions to the scope of
the Equator Principles, therefore this module includes specific questions on, and approaches to,
these product types.

WHAT TYPES OF PROJECTS AND TRANSACTIONS ARE WITHIN THE SCOPE OF THE EQUATOR
PRINCIPLES?

The Equator Principles applies globally, to all industry sectors and to five financial products:

• Project Finance Advisory Services;

• Project Finance;
• Project-Related Corporate Loans;
• Bridge Loans; and
• Project-Related Refinance and Project-Related Acquisition Finance

The relevant thresholds and criteria, that define when the Equator Principles is applicable to
each product type, are described in detail in the Scope section of the Equator Principles. The
requirements under each principle may vary for each product type therefore please refer to
the Equator Principles for specific details.

It should be noted that if a transaction falls outside of the scope of Equator Principles, it does
not automatically imply there is an absence of environmental, social, or reputational risk. The
EPFI can, voluntarily and at its discretion, apply the Equator Principles’ environmental and
social risk management framework to other transactions as part of its broader environmental
and social risk management policy or process. However, as this application would not meet all
of the requirements in the Equator Principles, it should not be referred to as ‘applying the
Equator Principles’.

6 September 2020
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PROJECT-RELATED CORPORATE LOANS

The Equator Principles apply to Project-Related Corporate Loans where all of the following three
criteria are met:

• The majority of the loan is related to a Project over which the client has Effective
Operational Control (either direct or indirect).
• The total aggregate loan amount and The EPFI’s individual commitment (before syndication
or sell down) are each at least US$50 million.
• The loan tenor is at least two years.

WHAT ARE EXAMPLES OF CORPORATE LOANS THAT FALL WITHIN THE SCOPE OF THE
EQUATOR PRINCIPLES?

Example 1:

A client approaches a lender to participate in a US$500M on-balance-sheet corporate loan.

The use of proceeds from the loan is as follows:

• US$300M for the development of a greenfield wind power plant

• US$100M to refinance old debt related to construction of a second power plant that is
currently in operation; and
• US$100M for general corporate purposes.

The client, who is the developer of the Project, is a subsidiary of a multinational entity.

Since more than 50% of the corporate loan proceeds are for the purposes of developing a
Project (i.e. the greenfield power plant), the client has Effective Operational Control over the
Project, and assuming all of the relevant Financial Thresholds and criteria (i.e. individual
commitment, minimum loan tenor) have been met, the loan is within the scope of the Equator
Principles.

Example 2:

A client approaches a lender to participate in a US$600M (total aggregate loan amount)

corporate loan. The lender’s individual commitment (before syndication or sell-down) is $60M.
The use of proceeds from the loan is for the construction and operation of a new refinery. The
client is the developer of the Project.

7 September 2020
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Since both the individual commitment and total aggregate loan amount before syndication or
sell-down are each at least US$50M, and the majority of the loan is related to a Project over
which the client has Effective Operational Control, assuming the tenor is at least two years, the
loan is within the scope of the Equator Principles. The EPFI’s individual commitment does not
have to be 50% or more of the total aggregate loan amount.

Example 3:

The Ministry of Transport of a Non-Designated Country seeks US$800M that will be used for
the construction of a new 200km railway. The EPFI’s individual commitment is US$100M.

Loans to Sovereign entities are under the scope of EP if the underlying Project is Category A, or
as appropriate Category B. In this case, it is highly likely a new 200km railway would be a
Category A, or as appropriate Category B Project, so the Project would fall under the scope of
the Equator Principles.

WHAT IS AN EXAMPLE OF A CORPORATE LOAN THAT IS OUTSIDE THE SCOPE OF THE

EQUATOR PRINCIPLES?

A client with numerous existing global operations approaches lenders to participate in a

US$500M, syndicated, three-year corporate term loan. The use of proceeds from the loan is as
follows:

• general corporate purposes;

• backstop to a commercial paper issue; and
• general capital and operational expenditures spread across its operations.

The EPFI has carried out basic due diligence on the general corporate purposes, and has
determined that it is not supporting the development of a new Project.

Since none of the proceeds will be utilised for a Project, the loan is not within the scope of the
Equator Principles.

8 September 2020
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WHAT INTERNAL SYSTEMS OR PRACTICES COULD THE EPFI ESTABLISH TO HELP IDENTIFY
WHICH CORPORATE LOANS ARE PROJECT-RELATED CORPORATE LOANS AND WITHIN THE
SCOPE OF THE EQUATOR PRINCIPLES?

As EPFIs are organised differently, there is no ‘standard’ system that the EPFI could adopt to
help them identify which corporate loans are within the scope of the Equator Principles. The
EPFI should determine the most appropriate system for its institution.

9 September 2020
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IF A CORPORATE LOAN IS RELATED TO MULTIPLE PROJECTS, SITES OR USES, IS IT WITHIN THE

SCOPE OF THE EQUATOR PRINCIPLES?

A Project is a development in any sector at an identified location (the location does not need
to be contiguous – a Project may be located over one or more geographic areas). The EPFI
should determine what is the ‘Project’ for the purposes of the financing. If more than 50% of
the use of proceeds is financing a Project, the Equator Principles is applicable, if all of the
relevant Financial Thresholds and criteria for a Project-Related Corporate Loan are met. Refer
to Project definition in Exhibit I: Glossary of Terms of the Equator Principles.

Example 1:

A large mining company seeks a US$750M project-related loan that will be used for the
construction of a new iron ore mine (US$500M) and the upgrade of port facilities for export of
the mined iron ore (US$250M). The EPFI’s individual commitment is US$150M.

Although located in separate areas, both Projects are highly related, and are therefore seen as
one “Project”. The Equator Principles thus applies to both Projects.

Example 2:

US$80M corporate loan to Corporation ‘A’ where the EPFI’s individual commitment is
US$60M. The loan will be used to finance a new solar PV project (US$45M) and electricity
substation to connect it to the local electricity grid (US$35M).

Both Projects are interdependent on each other and thus related. The financing is within the
scope of the Equator Principles because these Projects are considered as one “Project”.

Note: Suppose the US$35M was to construct an electricity substation elsewhere, and wasn’t
needed for the new solar PV project. Then only the new solar PV project would fall under the
scope of EP, as it receives more than 50% of the total loan amount.

Example 3:

US$1,800M corporate loan to Corporation ‘B’ to finance three separate manufacturing

facilities at different locations in a Non-Designated Country, each costing US$600M. The EPFI’s
individual commitment is US$150M.

As none of the Projects receive more than 50% of the total loan amount, and are independent
to each other, none are within the scope of the Equator Principles.

10 September 2020
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Example 4:

US$120M loan to Corporation ‘C’ who has two Projects in the feasibility phase. These two
Projects are not related and are independent.

Neither the Project costs nor the use of proceeds for each Project have been identified,
therefore the loan would not be within the scope of the Equator Principles.

DOES THE EQUATOR PRINCIPLES APPLY TO A/B LOANS? IF YES, HOW DOES AN EPFI
DETERMINE IF IT MEETS THE FINANCIAL THRESHOLD?

A/B loans are loans to one Project with two tranches (i.e. an ‘A tranche’ and a ‘B tranche’).

A/B loans are usually arranged by Development Finance Institutions (DFIs), where the DFI is
the Lender of Record in the transaction and acts as Lead Lender and Administrative Agent for
the entire A/B loan facility. The DFI lends the A tranche of the loan from its resources and
partners with other financial institutions to provide the B tranche of the loan.

An A/B loan is subject to the Equator Principles, as a Project Finance or a Project-Related

Corporate Loan, if all of the relevant Financial Thresholds and criteria are met.

For a Project-Related Corporate Loan ‘A/B Loan’, the total aggregate loan amount is the A
tranche and B tranche combined. Therefore, if the DFI loan under tranche A is US$60M and
EPFI loan under tranche B is US$60M, the total aggregate loan amount is US$120M. The
Equator Principles is applicable if the total aggregate loan amount is above US$50M, and all of
the relevant Financial Thresholds and criteria for the Project-Related Corporate Loan are met.

11 September 2020
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HOW SHOULD THE ‘B’ LENDER (AN EPFI) PROCEED WHEN THEIR LOAN TRIGGERS THE
EQUATOR PRINCIPLES AND THE ‘A’ LENDER (A NON-EPFI) HAS NOT CONDUCTED AN
ENVIRONMENTAL AND SOCIAL IMPACT ASSESSMENT THAT IS FULLY IN ACCORDANCE WITH
THE EQUATOR PRINCIPLES?

If the ‘B’ loan falls within the scope of the Equator Principles, the EPFI (‘B’ tranche lender) must
be comfortable that all the risks and impacts have been fully addressed by the Environmental
and Social Impact Assessment (ESIA) or equivalent studies/documentation conducted by the
non-EPFI (‘A’ tranche lender) before committing to providing the loan.

If there is no ESIA or equivalent studies/documentation, the EPFI should ensure that this is
undertaken in accordance with the requirements of the Equator Principles.

ARE FPSO INSTALLATIONS, DRILL SHIPS, AND DRILL RIGS FINANCED BY PROJECT FINANCE OR
PROJECT-RELATED CORPORATE LOANS WITHIN THE SCOPE OF THE EQUATOR PRINCIPLES?

A Floating Production Storage and Offloading installation (FPSO), drill ship, or drill rig is within
the scope of the Equator Principles if the asset is directly owned by the client (or its subsidiary)
and the client (or its subsidiary) owns or has Effective Operational Control of the oil or gas
Project where the asset is in operation.

IS RESERVE–BASED FINANCING WITHIN THE SCOPE OF THE EQUATOR PRINCIPLES?

Reserve-Based Financing is traditionally used for oil and gas Projects, where a loan is provided
based on the value of the oil or gas in the ground.

When the proceeds of the loan are used to develop a new oil and gas field, or to expand or
upgrade an existing Project, the loan may fall within the scope of the Equator Principles
(subject to meeting the relevant Financial Thresholds and criteria) as Project Finance or a
Project-Related Corporate Loan, depending on whether it is a non-recourse or recourse loan.

12 September 2020
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ARE BUYER CREDITS ALWAYS CONSIDERED PROJECT-RELATED CORPORATE LOANS AND

HENCE ALWAYS WITHIN SCOPE OF THE EQUATOR PRINCIPLES?

No. Whilst Project-Related Corporate Loans shall include Export Finance in the form of Buyer
Credit, this statement does not automatically imply the reverse, i.e. it does not mean that all
Buyer Credits are automatically Project-Related Corporate Loans.

For example, a Buyer Credit provided for Asset Finance or for leasing is not within the scope of
the Equator Principles. As further examples: the financing of an Airbus 350 with the support of
an Export Credit Agency (ECA) would hence be out of scope of the Equator Principles and
similarly a financing backed by an ECA to a lease company with which it finances the import of
equipment, is out of scope.

However, a financing backed by an ECA to a new mining project over which the client has
Operational Control, with which mining equipment is financed, is in scope as a Project-Related
Corporate Loan or as Project Finance.

13 September 2020
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WHAT IS AN EXAMPLE OF AN EXPORT FINANCE LOAN THAT IS WITHIN THE SCOPE OF THE
EQUATOR PRINCIPLES?

Example 1:

A government-owned corporation is building a gas-fired power plant.

Boilers and other equipment are bought from a consortium of suppliers and financed through
three Export Credit Agency (ECA) covered Buyer Credits to the government-owned
corporation.

Each ECA covered Buyer Credit is for US$120M and has a seven-year maturity.

The EPFI will commit to one of the ECA covered Buyer Credits for the amount of US$50M with
the intention of syndicating US$25M.

The Equator Principles apply because all three of the criteria for a Project-Related Corporate
Loan are met. Project-Related Corporate Loans include loans to government-owned
corporations and other legal entities created by a government to undertake commercial
activities on their behalf. This would include Category A and appropriate B loans to national,
regional, or local governments, governmental ministries and agencies.

Example 2:

A large mining company seeks a US$180M Project-Related Corporate Loan to finance the
acquisition of new mining equipment that will be used in a material expansion of an existing
gold mine. The EPFI’s individual commitment is US$60M. The equipment will be 85% covered
by an Export Credit Agency.

Although the funds are being used for Asset Finance (i.e. the mining equipment), the
equipment will only be used at the mine and not elsewhere, and is in the form of a Buyers
Credit.

The financing therefore counts as a Project because the equipment will be at an identified
location and facilitates an expansion of an existing operation that results in a material change
in output. The financing is thus within the scope of the Equator Principles.

14 September 2020
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ARE PROJECT BONDS WITHIN THE SCOPE OF THE EQUATOR PRINCIPLES?

No. A Project Bond, underwritten by the EPFI, is not within the scope of the Equator Principles
even if the EPFI is financing the same Project via Project Finance, a Project-Related Corporate
Loan, Project-Related Refinance, or Project-Related Acquisition Finance. The Project Finance or
Project-Related Corporate Loan, however, may be subject to the Equator Principles if all of the
relevant Financial Thresholds and criteria are met.

WHAT QUALIFIES AS ‘LARGE-SCALE’ FOR A REAL ESTATE DEVELOPMENT?

The Equator Principles does not define ‘large-scale’ therefore it is the responsibility of the EPFI
to determine, based on the risks and impacts of the real estate development, when to apply
the Equator Principles to mitigate and manage the risks and impacts.

ARE THERE DIFFERENCES IN THE APPLICATION OF THE EQUATOR PRINCIPLES TO PROJECT-

RELATED CORPORATE LOANS AND TO PROJECT FINANCE?

Yes, as detailed below.

For Principles 1 to 8, the approach to Project-Related Corporate Loans and Project Finance is
the same.

For Principle 9 (Independent Monitoring and Reporting), the approach for Project-Related
Corporate Loans is, in some cases, different. Refer to the Equator Principles for further
information.

For Principle 10 (Reporting and Transparency), ‘Project Name Reporting’ for Project Finance
remains applicable. Project name reporting is also required for relevant Refinance and
Acquisition Finance of Project Finance transactions. This is further encouraged for Project-
Related Corporate Loans. Please refer to Annex B – Minimum Reporting Requirements.

15 September 2020
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HOW DOES THE EPFI CONDUCT AN INTERNAL REVIEW, IF IT IS DETERMINED, AS PER

PRINCIPLE 7, THAT AN INDEPENDENT CONSULTANT IS NOT REQUIRED?

Principle 7 requires that for all Category A, and as appropriate, Category B projects, an
Independent Environmental and Social Consultant will carry out an Independent Review of the
Assessment process including the ESMPs, the Environmental and Social Management System
(ESMS), and the Stakeholder Engagement process documentation, in order to assist the EPFI’s
due diligence and determination of Equator Principles compliance.

Where the EPFI determines that a Category B project does not require an Independent
Environmental and Social Consultant, the EPFI should determine the most appropriate way to
conduct its internal review of the Environmental and Social Assessment Documentation
(Assessment Documentation) based on its internal procedures and risk policy.

UNDER PRINCIPLE 7 AND AS PART OF THE INTERNAL REVIEW, HOW AND TO WHAT EXTENT
CAN THE EPFI RELY ON DUE DILIGENCE PERFORMED BY A MULTILATERAL OR BILATERAL
FINANCIAL INSTITUTION OR AN OECD EXPORT CREDIT AGENCY?

The EPFI has to decide whether the existing E&S due diligence carried out by others satisfies
their own internal processes and procedures, and meets the requirements of the Equator
Principles. This may require the EPFI to undertake their own additional Independent Review
and determination of Equator Principles compliance to compliment the work of others.

16 September 2020
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BRIDGE LOANS

The Equator Principles apply to Bridge Loans with a tenor of less than two years, that are intended to
be refinanced by Project Finance or a Project-Related Corporate Loan that is anticipated to meet the
relevant criteria described for those financial products.

ARE BRIDGE LOANS THAT ARE REFINANCED BY A PROJECT BOND WITHIN THE SCOPE OF THE
EQUATOR PRINCIPLES?

No. Only Bridge Loans intended to be refinanced by Project Finance or a Project-Related

Corporate Loan, which are anticipated to meet all of the relevant Financial Thresholds and
criteria, are within the scope of the Equator Principles.

IS A BRIDGE LOAN, WHERE THE REFINANCING OR “TAKEOUT” STRUCTURE IS UNKNOWN,

WITHIN THE SCOPE OF THE EQUATOR PRINCIPLES?

No. A Bridge Loan, where the “takeout” structure (i.e. Project Finance or Project-Related
Corporate Loan) is unknown to the client at the time of the loan, is not within the scope of the
Equator Principles.

17 September 2020
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WHAT IS AN EXAMPLE BRIDGE LOAN WITHIN THE SCOPE OF THE EQUATOR PRINCIPLES?

Example 1:

The client seeks a Bridge Loan for the early stage of a transmission line Project and the final
route of the line is not yet determined.

The client clearly states, in the loan application materials and other communications, or it
becomes clear/obvious through inquiry and due diligence, that the use of proceeds includes:

• purchasing construction equipment;

• purchasing steel for raw material for transmission towers; and
• financing studies, including Environmental and Social Assessments, funding for
community engagement process etc.

Based on this information, the EPFI already has confirmation that the client is planning to
undertake an Environmental and Social Assessment. Due to the early stage of the Project, the
only other requirement is that the client confirms its intention to adhere to the Equator
Principles when seeking any subsequent Project Finance or Project-Related Corporate Loan for
the purpose of refinancing the Bridge Loan.

Example 2:

The client seeks a one-year Bridge Loan that will be refinanced by Project Finance that is within
the scope of the Equator Principles. The use of proceeds are directed to the expansion of an
existing mine and the changes in scale or scope of the expansion may create significant
environmental and social risks and impacts, or significantly change the nature or degree of an
existing impact. The Assessment Documentation has been prepared and the expansion is
scheduled to begin within the tenor of the Bridge Loan.

The approach below is an example of what would be expected under the Equator Principles.

The EPFI works with the client to identify an Independent Environmental and Social Consultant
and develop a scope of work for an Independent Review (as defined in Principle 7 of the
Equator Principles). Furthermore, the EPFI requires the client to communicate its intention to
adhere to the Equator Principles when seeking any subsequent Project Finance for the purpose
of refinancing the Bridge Loan.

18 September 2020
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DOES THE EQUATOR PRINCIPLES APPLY TO ONLENDING ACTIVITIES OR ‘TWO-STEP LOANS’

WHERE THE EPFI LENDS TO AN INTERMEDIARY FINANCIAL INSTITUTION WHO
SUBSEQUENTLY FINANCES A PROJECT?

If the EPFI is lending to an intermediary financial institution (i.e. the client), who then onlends
to a Project (i.e. providing the ‘first-step’ in the ‘two-step loan’), the EPFI’s loan is not within
the scope of the Equator Principles because the client does not have Effective Operational
Control over the Project.

If the EPFI is the intermediary financial institution (i.e. providing the ‘second-step’ in the ‘two-
step loan’), the loan that the EPFI is receiving to finance a Project may fall within the scope of
the Equator Principles if all of the relevant Financial Thresholds and criteria are met.

ARE BRIDGE LOAN GUARANTEES OR LETTERS OF CREDIT FOR BRIDGE LOANS WITHIN THE
SCOPE OF THE EQUATOR PRINCIPLES?

No. These financial products are not within the scope of the Equator Principles.

HOW DO THE EQUATOR PRINCIPLES APPLY TO BRIDGE LOANS WITH A TENOR OF MORE
THAN 2 YEARS?

For the purposes of the Equator Principles, a Bridge Loan of more than 2 years should not be
treated as an interim loan, but as a Project Finance or Project-Related Corporate Loan
transaction, and the actions applicable for Project Finance and Project-Related Corporate
Loans should be followed.

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PROJECT-RELATED REFINANCE AND PROJECT-RELATED ACQUISITION FINANCE

The Equator Principles apply to Project-Related Refinance and Project-Related Acquisition Finance
where all of the following three criteria are met:

• The underlying Project was financed in accordance with the Equator Principles framework.
• There has been no material change in the scale or scope of the Project.
• Project Completion has not yet occurred at the time of the signing of the facility or loan
agreement.

ARE CORPORATE ACQUISITIONS, FINANCED VIA A LIMITED–RECOURSE STRUCTURE, WITHIN

THE SCOPE OF THE EQUATOR PRINCIPLES?

Yes. Acquisition Finance may be within the scope of the Equator Principles if the following
criteria are satisfied:

• The underlying Project was financed in accordance with the Equator Principles
framework.

• There has been no material change in the scale or scope of the Project.

• Project Completion has not yet occurred at the time of the signing of the facility or
loan agreement.

There may be certain examples where a financial product may be considered both a Project-
Related Corporate Loan and Project-Related Acquisition Finance. In this situation, it is at the
EPFI’s discretion to apply the most relevant financial product under the Equator Principles that
will best allow them to assess and manage environmental and social risks and impacts in a
structured way, as per their signatory obligations.

20 September 2020
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HOW TO HANDLE CASES WHERE PROJECTS GET SOLD/ACQUIRED WHEN UNDER

CONSTRUCTION OR PART WAY THROUGH DEVELOPMENT?

The requirement is to novate/carry over, to the extent possible, existing E&S obligations.

For example, if a Project under construction has relevant Equator Principles requirements such
as an Equator Principles Action Plan (EPAP) and Independent Environmental and Social
Consultant monitoring requirements, the new EPFI would need to take reasonable measures
to ensure that these existing obligations continue to apply (and draft/novate them into new
facility agreements). The new EPFI may need to make the acquirer aware of the content,
application and benefits of continuing to apply the Equator Principles to the Project, and
facilitate any concerns the acquirer might have in novation. There is no requirement for the
new EPFI to conduct a new or updated Assessment.

However, if a Project has no existing E&S obligations (no Action Plan, no monitoring, no clauses
requiring compliance with E&S standards), there is no requirement for the EPFI to create new
obligations. In this event, there is no obligation to report the Acquisition Finance as an EP
Project. EPFIs should take reasonable measures to determine whether there were any
previous E&S obligations.

Example 1: Project-Related Refinance

A client approaches an EPFI to participate in the refinancing of a Project to construct a new

airport in a greenfield area, which is approximately 50% complete.

After inquiring, the client discloses that the Project was originally financed under the Equator
Principles and that an EP Action Plan is in place along with other E&S obligations relating to
monitoring.

If it is confirmed that there has been no material change in scope or scale of the Project since
the original financing, and that the loan is not at or near default, then the Equator Principles
apply. The EPFI must thus undertake all reasonable measures to ensure that the existing EP
Action Plan and other E&S obligations are novated to new financing documents.

Example 2: Project-Related Acquisition Finance

A client approaches an EPFI to participate in a US$400M Term Loan facility which will be used

21 September 2020
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to finance the acquisition of a Project Company that owns a mining license. The Selling
Company originally financed the Project Company under the Equator Principles. The EPFI’s
individual commitment under the acquisition facility is US$100M, the tenor is 5 years and the
acquiring company will have Effective Operational Control of the Project Company. During the
due diligence process for the acquisition, the ESIA, EPAP, SEP (Stakeholder Engagement Plan)
and other materials are provided to the acquiring party. Since the request meets all three
criteria, the financing would qualify as Project-Related Acquisition Finance under the Equator
Principles.

WILL A CASE WHERE ACQUISITION FINANCING OF EXISTING ASSETS (FINANCED UNDER EP),
WHERE MATERIAL EXPANSION AND/OR UPGRADE IS PLANNED OR ONGOING, BE
INTERPRETED AS REQUIRING FULL EP REVIEW?

EPFI requirement for Acquisition Finance (i.e. ensure that all relevant existing environmental
and social obligations continue to be included in new financing documentation) does not apply
as there has been material change in the scale or scope of the underlying Project.

However, EPFIs should conduct a full EP review on material expansion/upgrade, if financing

(i.e. loan for new CAPEX) meets the relevant Financial Thresholds and criteria for Project
Finance or Project-Related Corporate Loan transaction.

If the financing includes an expansion/upgrade, the EPFI should determine if this will give rise
to additional environmental and social impacts, as full application of the Equator Principles will
be required under these circumstances.

IF REFINANCING WHERE CRITERIA 1 AND 3 ARE MET, BUT THERE HAS BEEN A MATERIAL
CHANGE IN SCALE OR SCOPE OF THE PROJECT, DO THE EQUATOR PRINCIPLES APPLY?

If an EPFI is providing refinancing for a Project where there has been a material expansion,
then the Equator Principles would be triggered as Project Finance or a Project-Related
Corporate Loan (subject to meeting the relevant criteria).

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DOES “ACQUISITION FINANCE” INCLUDE DIRECT EQUITY ACQUISITIONS OF PROJECTS OR

PROJECT COMPANIES BY EPFIS, WHERE THE EPFI ITSELF HAS EFFECTIVE OPERATIONAL
CONTROL?

No. Acquisition Finance is the provision of limited-recourse debt finance by EPFIs to clients,
where the proceeds of such finance are then used by the client to acquire a Project or a Project
Company which exclusively owns, or has a majority shareholding in a Project, and over which
the client has Effective Operational Control.

23 September 2020
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MODULE II: CLIMATE CHANGE

This module provides information and examples to support the understanding of the climate change
requirements in, and implementation of, the Equator Principles.

PRINCIPLE 2 AND ANNEX A: ALTERNATIVES ANALYSIS

WHAT ARE THE ALTERNATIVES ANALYSIS REQUIREMENTS?

Principle 2 requires an alternatives analysis to be conducted by the client (or an external party
commissioned by the client) when the Project is expected to emit more than 100,000 tonnes
of CO2 equivalent annually during the construction and/or operational phase.

An alternatives analysis should be conducted for all Projects (i.e. all Project Finance and
Project-Related Corporate Loans subject to the Equator Principles), in all locations (i.e. in both
Designated and Non-Designated Countries), that meet the emission criteria described above.

The threshold of 100,000 tonnes of CO2 equivalent annually, and the alternatives analysis,
includes emissions from the facilities owned or controlled within the physical Project boundary
(Scope 1 Emissions), and indirect emissions associated with the off-site production of energy
used by the Project (Scope 2 Emissions).

Annex A of the Equator Principles explains that clients should evaluate the technically and
financially feasible and cost-effective options available to reduce project-related Greenhouse
Gas (GHG) emissions during the design, construction and operation of the Project.

Following completion of an alternatives analysis, the client will provide, through appropriate
documentation, evidence of technically and financially feasible and cost-effective options and
justification on the selection of technologies.

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WHAT TYPES OF PROJECTS REQUIRE AN ALTERNATIVES ANALYSIS?

All Projects emitting more than 100,000 tonnes of CO2 equivalent annually (combined Scope 1
and Scope 2 Emissions) during the construction and/or operational phase.

Projects exceeding this threshold may come from, but will not be limited, to high carbon
intensity sectors. These sectors indicatively include, but are not limited to, the following: oil
and gas, thermal power, cement and lime manufacturing, integrated steel mills, base metal
smelting and refining, and foundries, pulp mills and potentially agriculture.

DOES THE ALTERNATIVES ANALYSIS INCLUDE AN ANALYSIS OF FEASIBLE OPTIONS TO

REDUCE SCOPE 2 EMISSIONS?

Yes. The alternatives analysis requires the evaluation of technically and financially feasible and
cost-effective options available to reduce project-related GHG emissions during the design,
construction and operation of the Project in relation to both Scope 1 and Scope 2 Emissions.
For Projects in high carbon intensity sectors, the alternatives analysis will include comparisons
to other viable technologies, used in the same industry and in the country or region, with the
relative energy efficiency, GHG efficiency ratio1 , as appropriate, of the selected technology.

IS THE EPFI OR THE CLIENT REQUIRED TO PUBLICLY DISCLOSE THE ALTERNATIVES ANALYSIS
OR DETAILED TECHNICAL INFORMATION RELATED TO THE GHG ALTERNATIVES?

Where appropriate, EPFIs will encourage clients to publish a summary of the alternatives
analysis as part of the ESIA. It should be noted that the alternatives analysis may be a separate
document, or may be a part of the engineering design or similar documentation. Furthermore,
public disclosure of the details contained in the full alternatives analysis may not be
appropriate, for example where the analysis includes business confidential, commercially
sensitive or proprietary information.

1
As appropriate, organisations should consider providing related, generally accepted industry-specific GHG
efficiency ratios. For industries with high energy consumption, metrics related to emissions intensity are
important to provide. For example, emissions per unit of economic output (e.g., unit of production, number of
employees, or value-added) are widely used (TCFD Implementation Annex, June 2017, p. 17).

25 September 2020
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PRINCIPLE 10: CLIENT REPORTING ON GREENHOUSE GAS EMISSIONS

WHAT IS THE GHG EMISSION REPORTING REQUIREMENT?

Principle 10 requires clients to report GHG emissions for all Category A and, as appropriate,
Category B projects (financed by Project Finance and Project-Related Corporate Loans subject
to the Equator Principles) where GHG emissions (combined Scope 1 and Scope 2 Emissions)
exceed 100,000 tonnes of CO2 equivalent annually.

Reporting is undertaken for the operational phase of the Project (i.e. following Project
Completion) over the life of the loan (i.e. whilst repayments are being made).

If the EPFI is financing the construction phase of the Project only but the life of the loan (i.e.
repayments are being made) continues in to the operational phase, the client would also be
required to report on the Project’s GHG emissions during the operational phase.

WHO IS REQUIRED TO REPORT ON A PROJECT’S GHG EMISSIONS?

The client.

WHAT INFORMATION SHOULD BE DISCLOSED BY THE CLIENT?

The EPFI will require the client to report publicly on an annual basis on GHG emission levels
(combined Scope 1 and Scope 2 Emissions) and GHG efficiency ratio, as appropriate, during the
operational phase for Projects emitting over 100,000 tonnes of CO2 equivalent annually.

26 September 2020
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WHAT IS REPORTED WHEN THE PROJECT IS AN UPGRADE OR EXPANSION OF A FACILITY, OR

ONLY ONE PHASE OF A FACILITY?

The client may report on the Project, or in the case of an expansion Project the phase being
financed, or the entire facility, whichever is more practical

In all cases the reporting threshold and combined Scope 1 and Scope 2 Emissions would apply.

WHAT METHODOLOGIES CAN BE USED TO CALCULATE THE GHG EMISSIONS?

GHG emissions (Scope 1 and Scope 2) should be calculated in line with the GHG Protocol to
allow for aggregation and comparability across Projects, organisations and jurisdictions. Clients
may use national reporting methodologies if they are consistent with the GHG Protocol.

HOW AND WHERE SHOULD THE CLIENT REPORT A PROJECT’S GHG EMISSIONS?

The client is required to report publicly on the Project’s GHG emission levels (combined Scope
1 and Scope 2 Emissions) and GHG efficiency ratio, as appropriate. However, the location of
the reporting, and the manner in which it is made available, is at the discretion of the client.

According to Annex A of the Equator Principles, public reporting requirement can be satisfied
via regulatory requirements for reporting or environmental impact assessments, or voluntary
reporting mechanisms such as the Carbon Disclosure Project when such reporting includes
emissions at project-level.

WHEN SHOULD EMISSIONS BE FIRST REPORTED AND WHAT IS THE DURATION OF

REPORTING?

Actual emissions reporting is undertaken for the operational phase of the Project (i.e.
following Project Completion) over the life of the loan (i.e. whilst repayments are being made).

27 September 2020
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ARE THERE EXCLUSIONS OR EXCEPTIONS FOR NON-REPORTING?

Clients may be exempt from public reporting where the client’s business confidentiality or
propriety information prevents reporting, or reporting may present a competitive
disadvantage to the client.

On rare occasions, other exclusions may apply, such as where the client cannot report publicly
for technical, legal or regulatory reasons.

DOES PUBLIC REPORTING ON AN AGGREGATE (CORPORATE) PORTFOLIO BASIS FULFIL THE

GHG REPORTING REQUIREMENT?

No. Principle 10 requires project-level reporting unless there is an exclusion or other exception
for non-reporting (see the previous question).

Furthermore, calculation of annual project-level GHG emissions is already required for Projects
in Non-Designated Countries as per the International Finance Corporation (IFC) Performance
Standard 3: Resource Efficiency and Pollution Prevention (Page 2, Paragraph 8).

For Projects in Non-Designated Countries, initial projected/forecast emissions are reported

through the ESIA in accordance with the IFC Performance Standards.

The client may already be monitoring and publicly reporting on other issues (e.g. pollutants,
health and safety track record, etc.) at project-level, therefore they may find it useful to
manage their public reporting of project-level GHG emissions as part of this existing process.

28 September 2020
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MODULE III: DESIGNATED COUNTRIES AND APPLICABLE STANDARDS

This module provides information and examples to support the understanding of the applicable
standards requirements in, and implementation of, the Equator Principles.

WHAT HAS CHANGED FROM EP III (June 2013) TO EP IV (July 2020)?

Under EP III, applicable standards for Projects in Designated Countries were defined as
relevant host country laws, regulations and permits that pertain to environmental and social
issues, as opposed to Non-Designated Countries, which were the IFC Performance Standards.
Thus it was considered that Principles 2, 4, 5 and 6 were automatically met just by complying
with local regulations.

Due to stakeholders’ concerns expressed in the management of Projects in Designated

Countries, which is what lead to the EP amendment process, EP IV acknowledges that
complying with local legislation in Designated Countries does not always guarantee compliance
with the all the requirements of each principle. EPFIs are now required to effectively evaluate
compliance with host country law and how each of the Principles is met. For the first time, it is
mentioned in the text that EPFIs may want to use the IFC Performance Standards as guidance
to address those risks in spite of the Project being located in a Designated Country.

29 September 2020
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PROJECTS IN DESIGNATED COUNTRIES: HOW DO YOU DETERMINE THAT A PROJECT HAS

SPECIFIC RISKS THAT COULD BE ADDRESSED USING IFC PS AS GUIDANCE?

EPFIs are aware that although Designated Countries tend to have robust environmental and
social governance, legislation systems and institutional capacity designed to protect their
people and the environment, it has been shown that there may be certain aspects of laws in
Designated Countries that do not go as far as the IFC PS. For this reason, Principle 3 specifies
that the EPFI will evaluate the specific risks of the Project to determine whether one or more
of the IFC Performance Standards could be used as guidance to address those risks.

“In addition, for Projects located in Designated Countries, the EPFI will evaluate the specific
risks of the Project to determine whether one or more of the IFC Performance Standards could
be used as guidance to address those risks, in addition to host country laws.”

Assessment process determines risks and impacts of the Project and Assessment
Documentation proposes measures to minimise, mitigate or compensate/offset/remedy risks
and impacts. If after compensation/offset/remediation measures, residual impacts remain
significant, then in line with the statements made in the Preamble, the Project needs further
compensation/offset/remediation measures.

Specific risks may include: adverse impacts on Indigenous Peoples, impacts on Critical Habitats,
significant cultural heritage impacts, large scale resettlement of population. These are just a
few examples of such times when EPFIs may need to evaluate whether employing the IFC
Performance Standards as guidance. It is also implicit that using IFC PS could be used as
guidance in addressing risks of Category A and, as appropriate, Category B projects, as they
present the most significant risks and impacts.

The residual impacts should be assessed on the basis of their ideal management and
mitigation, and not on the basis of only complying with applicable laws.

The EPFI may also evaluate specific risks by using the IFC PS as guidance (either the full set of /
or specific PS), for instance in situations such as the review of : a Project led by a junior
company (PS1), a Project in a new industry for which local regulation is not fixed (full set of PS),
a Project with identified adverse E&S impacts that needs detailed assessment (specific PS and
EHS Guidelines), a Project in a Designated Country having unclear or non-transparent
regulation at the country or regional level (full set of PS and EHS Guidelines), a Project with
non-publicly disclosed Assessment Documentation, in particular with respect to the
Stakeholder Engagement and mitigation measures that have been implemented (PS1, 4, 5, 7,
8).

30 September 2020
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WHAT IS AN EXAMPLE PROJECT WITH SPECIFIC RISKS?

“The EPFI may, at its sole discretion, undertake additional due diligence against additional
standards relevant to specific risks of the Project and apply additional requirements.”

Projects in the nuclear power sector present very specific risks (safety, waste treatment, dual
use, independence of the safety authority, etc.), that are not addressed by the IFC
Performance Standards and EHS Industry Sector Guidelines. Due to the significance of
potential negative impacts of a nuclear power plant, EPFIs must undertake additional due
diligence against additional standards (e.g. IAEA Safety Standards, relevant treaties and
conventions such as Non Proliferation Treaty, Joint Convention on the Safety of Spent Fuel
management and on the Safety of Radioactive Waste management, etc.).

Hydropower Projects may present specific risks that are not addressed in the EHS Industry
Sector Guidelines. Due to the significance of potential negative impacts of a hydropower plant,
EPFIs may undertake additional due diligence against additional standards and guidelines such
as the World Commission on Dams, the Hydro Power Sustainability Assessment Protocol
(HPSAP) or the IFC’s Good Practice Note on Environmental, Health, and Safety Approaches for
Hydropower Projects.

Although Equator Principles do not specifically require assessment of E&S risks of supply
chains, for biomass energy generation, EPFI may consider if the source of feedstock
contributes to deforestation, land conflicts and water stress. The client is encouraged to obtain
relevant sustainability certificate such as FSC and/or PEFC.

EPFIs may undertake additional due diligence against guidelines, conventions, treaties or
initiatives such as OECD Due Diligence Guidance For Responsible Supply Chain of Minerals
from Conflict-Affected and High-Risk Areas, Cyanide Code, the Kimberley Process, etc., for
Projects that involving minerals. The Voluntary Principles on Security and Human Rights may
also cover specific risks met in the extractive and energy industry.

CAN YOU GIVE OTHER EXAMPLES OF ADDITIONAL STANDARDS AND REQUIREMENTS?

Examples of additional requirements and standards: OECD common approaches if there is an

ECA cover/participation, guidelines or policies of bilateral or multilateral financing institution if
they are financing/covering the Project, EPFIs’ CSR policies relevant to the Project, guidance
notes of IFC PS.

31 September 2020
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MODULE IV: REPORTING

This module provides information and examples to support the understanding of the reporting
requirements in, and implementation of, the Equator Principles.

PRINCIPLE 5: STAKEHOLDER ENGAGEMENT

WHAT ASSESSMENT DOCUMENTATION SHOULD THE CLIENT DISCLOSE AND TO WHOM?

The Assessment Documentation appropriate for a client to disclose to Affected Communities

depends on the scale and nature of the Project’s risks and impacts, and will vary from Project
to Project.

Principle 5 is not prescriptive about what documentation should be disclosed (and under what
circumstances), however it states that the information provided should be commensurate with
the Project’s risks and impacts, readily available, in the local language, and culturally
appropriate.

If the EPFI has engaged an Independent Environmental and Social Consultant, they may be
able to provide an opinion on whether this requirement has been met.

Assessment Documentation should be made readily available to Other Stakeholders where

relevant.

The terms ‘Assessment Documentation’ or ‘Environmental and Social Assessment

Documentation’ is defined in the Glossary of this document and in Exhibit I: Glossary of Terms
of the Equator Principles.

32 September 2020
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PRINCIPLE 10: CLIENT REPORTING REQUIREMENTS

WHAT ASSESSMENT DOCUMENTATION SHOULD THE CLIENT DISCLOSE ONLINE?

For all Category A and, as appropriate, Category B Projects, the client is, at a minimum,
required to disclose a summary of the ESIA online, including a summary of Human Rights and
climate change risks and impacts when relevant.

WHERE SHOULD THE CLIENT DISCLOSE ITS ASSESSMENT DOCUMENTATION?

The client should disclose its Assessment Documentation on an external website that it
considers appropriate.

For example, the Assessment Documentation could be disclosed on the client website, or on
the website of a shareholder or sponsor, relevant environmental authority, regulator or
government institution, Export Credit Agency or International Financial Institution.

WHAT IS THE REQUIRED TIME FRAME, DURATION AND LANGUAGE FOR THE CLIENT’S
DISCLOSURE OF THE ASSESSMENT DOCUMENTATION?

There is no specified time frame or duration for the online disclosure of the Assessment
Documentation however the EPFI could establish its own criteria.

Assessment Documentation disclosed by third-parties (e.g. environmental agency, regulator,

financial institution) may be required to remain online for a specific period of time depending
on their disclosure policies.

Assessment Documentation should be made readily available to Affected Communities, and

where relevant Other Stakeholders, in the local language and, if available it may be published
in English.

33 September 2020
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PRINCIPLE 10 AND ANNEX B: EPFI REPORTING REQUIREMENTS

WHICH TRANSACTIONS ARE SUBJECT TO THE EPFI REPORTING REQUIREMENTS IN PRINCIPLE

10 AND ANNEX B OF THE EQUATOR PRINCIPLES?

In accordance with Principle 10, the EPFI is required to report publicly, at least annually, on
transactions that were subject to the Equator Principles and have reached Financial Close; and
on its Equator Principles implementation processes and experience, taking in account
appropriate confidentiality considerations.

Annex B of the Equator Principles provides detail on the types of transactions that are subject
to Principle 10, the specific reporting requirements for each of the applicable transactions, and
the criteria for the submission of Project Name Reporting for Project Finance, Project-Related
Refinance, Project-Related Acquisition Finance, and Project-Related Corporate Loan. Bridge
Loans, due to their nature, are not subject to specific reporting requirements.

IN PRINCIPLE 10, WHAT IS MEANT BY “APPROPRIATE CONFIDENTIALITY CONSIDERATIONS”?

The EPFI is not required to publish information, related to its institution or client, that could be
financially or commercially sensitive, or where disclosure violates applicable laws and
regulations.

34 September 2020
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HOW CAN EPFI REPORTING DATA BE PRESENTED?

The minimum reporting requirements detailed in Principle 10 and Annex B of the Equator
Principles are self-explanatory however for clarity and to promote consistency, the following
example tables have been prepared for each product type to show the minimum level of detail
required and how it could be presented.

Note that these tables are for illustrative purposes only and the EPFI may elect to present its
data using different formats, graphs, charts, or tables.

PROJECT FINANCE

The total number of Project Finance transactions that reached Financial Close from [Date] to
[Date] was 34. The breakdown is as follows:

BREAKDOWN BY CATEGORY
Category A Category B Category C
11 16 7
DETAILED BREAKDOWN BY CATEGORY
By Sector Category A Category B Category C
Mining 1 - 1
Infrastructure 6 8 -
Oil & Gas 3 3 3
Power - - 2
Other 1 5 1
By Region Category A Category B Category C
Americas 5 6 1
Europe, Middle East & Africa 2 1 6
Asia and Oceania 4 9 -
By Country Designation Category A Category B Category C
Designated 10 3 4
Non-Designated 1 13 3
Independent Review2 Category A Category B Category C
Yes 11 10 -
No - 6 7

2An Independent Review may not be required for all Projects (e.g. an Independent Review is not required for Category C
Projects). Please refer to the Equator Principles for details on what is required for each Category and product type.

35 September 2020
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PROJECT-RELATED CORPORATE LOANS

The total number of Project-Related Corporate Loans that reached Financial Close from [Date]
to [Date] was 86. The breakdown is as follows:

BREAKDOWN BY CATEGORY
Category A Category B Category C
5 69 12
DETAILED BREAKDOWN BY CATEGORY
By Sector Category A Category B Category C
Mining 5 34 6
Infrastructure - 12 3
Oil & Gas - 16 2
Power - 3 1
Other - 4 -
By Region Category A Category B Category C
Americas 2 45 -
Europe, Middle East & Africa 2 - 12
Asia and Oceania 1 24 -
By Country Designation Category A Category B Category C
Designated 5 65 8
Non-Designated - 4 4
Independent Review3 Category A Category B Category C
Yes 5 63 -
No - 6 12

3
An Independent Review may not be required for all Projects (e.g. an Independent Review is not required for Category C
Projects). Please refer to the Equator Principles for details on what is required for each Category and product type.

36 September 2020
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PROJECT-RELATED REFINANCE AND PROJECT-RELATED ACQUISITION FINANCE

The total number of Project-Related Refinance and Project-Related Acquisition Finance that
reached Financial Close from [Date] to [Date] was 14. The breakdown is as follows:

BREAKDOWN BY SECTOR, REGION, AND COUNTRY DESIGNATION

By Sector
Mining 3
Infrastructure 2
Oil & Gas 2
Power 3
Other 4
By Region
Americas 3
Europe, Middle East & Africa 7
Asia and Oceania 4
By Country Designation
Designated 7
Non-Designated 7

PROJECT FINANCE ADVISORY SERVICES

The total number of Project Finance Advisory Services mandated from [Date] to [Date] was 12.
The breakdown is as follows:

BREAKDOWN BY SECTOR AND REGION

By Sector
Mining 1
Infrastructure 7
Oil & Gas -
Power 2
Other 2
By Region
Americas 3
Europe, Middle East & Africa 7
Asia and Oceania 2

37 September 2020
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WHAT ARE THE EPFI REPORTING REQUIREMENTS RELATED TO SUBMITTING PROJECT NAME
FOR PROJECT FINANCE DATA?

In accordance with Annex B of the Equator Principles, ‘Project Name for Project Finance’ data
reporting is required for Project Finance (including relevant Refinance and Acquisition Finance)
transactions that have reached Financial Close and encouraged for Project-Related Corporate
Loans that have reached Financial Close,

• subject to obtaining client consent,

• subject to applicable local laws and regulations, and
• subject to no additional liability for the EPFI as a result of reporting in certain identified
jurisdictions.

The EPFI is required to submit the following ‘Project Name for Project Finance’ data to the
Equator Principles Association Secretariat directly or via a web link:

• ‘Project Name’ (i.e. the name as per the loan agreement and/or as publicly
recognised),
• ‘Year’ (i.e. the calendar year in which the transaction reached Financial Close);
• ‘Sector’ (i.e. Mining, Infrastructure, Oil and Gas, Power, or Others),
• ‘Name of the Host Country’ (i.e. the country in which the Project is located).

SHOULD THE EPFI SEEK CLIENT CONSENT BEFORE SUBMITTING PROJECT NAME FOR PROJECT
FINANCE DATA TO THE EQUATOR PRINCIPLES ASSOCIATION SECRETARIAT?

Yes. The EPFI is required to seek formal consent from the client before disclosing ‘Project
Name for Project Finance’ data. Some Export Credit Agencies have established policies that
allow them to disclose this information without formally seeking consent from their clients.

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WHEN AND HOW SHOULD THE EPFI SEEK CLIENT CONSENT?

To promote consistency in project name reporting, EPFIs in a syndicate should coordinate for
the mandated lead arranger or environmental agent to seek client consent on behalf of the
syndicate. If not feasible, each EPFI should independently contact the client for consent at any
time deemed appropriate but no later than Financial Close.

UNDER WHAT CIRCUMSTANCES WOULD THE EPFI BE EXEMPT FROM SUBMITTING PROJECT
NAME FOR PROJECT FINANCE DATA TO THE EQUATOR PRINCIPLES ASSOCIATION
SECRETARIAT?

The EPFI is not required to submit ‘Project Name for Project Finance’ data if:

• the client does not give consent to disclose the data, and/or
• the EPFI or Project is located in a country where the disclosure of the data violates
applicable local laws and regulations, and/or
• in certain jurisdictions the disclosure of the data increases the EPFI liability.

In accordance with Rule 6e) of the Equator Principles Association Governance Rules, in the
cases where the EPFI cannot report its ‘Project Name for Project Finance data’, the EPFI will
send a brief explanatory statement to the Equator Principles Association Secretariat so that
the exceptions can be reflected in summary form (i.e. with no reference to the EPFI or Project
Name) on the Equator Principles Association website.

WHEN IS THE EPFI REQUIRED TO SUBMIT DATA AND IMPLEMENTATION REPORTING AND
PROJECT NAME REPORTING FOR PROJECT FINANCE DATA TO THE EQUATOR PRINCIPLES
ASSOCIATION SECRETARIAT?

In accordance with Rule 6f) of the Equator Principles Association Governance Rules, the EPFI is
required to submit its ‘Data and Implementation Reporting’ and ‘Project Name for Project
Finance’ data in a single submission on an annual basis and by a specific quarterly period end
date (i.e. 31 January, 30 April, 31 July or 31 October).

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WHERE AND WHEN DOES THE EQUATOR PRINCIPLES ASSOCIATION SECRETARIAT PUBLISH
PROJECT NAME FOR PROJECT FINANCE DATA?

The Equator Principles Association Secretariat collates all ‘Project Name for Project Finance’
data submitted by EPFIs and displays it on a per EPFI basis on the Equator Principles
Association website.

In accordance with Rule 6c) of the Equator Principles Association Governance Rules, the
compiled ‘Project Name for Project Finance’ data is published on the Equator Principles
Association website when EPFIs submit their annual report.

IS THE EPFI REQUIRED TO DISCLOSE PROJECT NAME FOR PROJECT FINANCE DATA ON ITS
WEBSITE?

The EPFI is not required to disclose ‘Project Name for Project Finance’ data on its website.
While the EPFI may choose to additionally publish this data on its website or in its reporting,
the only requirement is to submit such information to the Equator Principles Association
Secretariat for publication on the Equator Principles Association website.

IS THE ONE-YEAR GRACE PERIOD ON REPORTING FOR NEW ADOPTERS STILL APPLICABLE?

Yes. In accordance with Rule 6d) of the Equator Principles Association Governance Rules, new
adopters have a one-year grace period (from the date of adoption), during which transaction
numbers and ‘Project Name for Project Finance’ data can be omitted from their public
reporting.

It should be noted that after the one-year grace period new adopters are, at a minimum,
required to report on their internal preparation and staff training.

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GLOSSARY OF TERMS

Acquisition Finance is provision of financing for the acquisition of a Project or a Project company
which exclusively owns, or has a majority shareholding in a Project, and over which the client has
Effective Operational Control.

Affected Communities are local communities, within the Project's area of influence, directly affected
by the Project.

Assessment (see Environmental and Social Assessment).

Assessment Documentation (see Environmental and Social Assessment Documentation).

Asset Finance is the provision of a loan for the purchase of assets (such as airplanes, cargo ships, or
equipment) in exchange for a security interest in those assets.

Bridge Loan is an interim loan given to a business until the longer term stage of financing can be
obtained.

Buyer Credit is a medium/long term Export Finance credit where the exporter’s bank or other
financial institution lends to the buyer or the buyer’s bank.

Critical Habitats are areas with high biodiversity value, including (i) habitat of significant importance
to Critically Endangered and/or Endangered species; (ii) habitat of significant importance to endemic
and/or restricted-range species; (iii) habitat supporting globally significant concentrations of
migratory species and/or congregatory species; (iv) highly threatened and/or unique ecosystems;
and/or (v) areas associated with key evolutionary processes.

Designated Countries are those countries deemed to have robust environmental and social
governance, legislation systems and institutional capacity designed to protect their people and the
natural environment. The Equator Principles Association makes no independent assessment of each
country’s performance in these areas. As a proxy for such an assessment, the Equator Principles
Association requires that a country must be both a member of the OECD and appear on the World
Bank High Income Country list to qualify as a Designated Country. These data set are reviewed
quarterly by the Equator Principles Secretariat to ensure that any change in status is reflected in the
Designated Countries list. The list of Designated Countries can be found on the Equator Principles
Association website.

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Effective Operational Control includes both direct control (as operator or major shareholder) of the
Project by the client and indirect control (e.g. where a subsidiary of the client operates the Project).

Environmental and Social Assessment (Assessment) is a process that determines the potential
environmental and social risks and impacts (including Human Rights and climate change risks and
impacts, if applicable) of a proposed Project in its area of influence.

Environmental and Social Assessment Documentation (Assessment Documentation) is a series of

documents prepared for a Project as part of the Assessment process. The extent and detail of the
documentation is commensurate with the Project’s potential environmental and social risks and
impacts. Where a Project has a potential to cause adverse Human Rights impacts, the Assessment
Documentation should include an assessment of those impacts. Examples of Assessment
Documentation are: an ESIA, Environmental and Social Management Plan (ESMP), or documents
more limited in scale (such as an audit, risk assessment, hazard assessment and relevant project-
specific environmental permits). Non-technical environmental summaries can also be used to
enhance the Assessment Documentation when these are disclosed to the public as part a broader
Stakeholder Engagement process.

Environmental and Social Impact Assessment (ESIA) is a comprehensive document of a Project’s

potential environmental and social risks and impacts. An ESIA is usually prepared for greenfield
developments or large expansions with specifically identified physical elements, aspects, and
facilities that are likely to generate significant environmental or social impacts. Exhibit II of the
Equator Principles provides an overview of the potential environmental and social issues addressed
in the ESIA.

Environmental and Social Management Plan (ESMP) summarises the client’s commitments to
address and mitigate risks and impacts identified as part of the Assessment, through avoidance,
minimisation, and compensation/offset. This may range from a brief description of routine
mitigation measures to a series of more comprehensive management plans (e.g. water management
plan, waste management plan, resettlement action plan, Indigenous Peoples plan, emergency
preparedness and response plan, decommissioning plan). The level of detail and complexity of the
ESMP and the priority of the identified measures and actions will be commensurate with the
Project’s potential risks and impacts. The ESMP definition and characteristics are broadly similar to
those of the “Management Programs” referred to in IFC Performance Standard 1.

Environmental and Social Management System (ESMS) is the overarching environmental, social,
health and safety management system which may be applicable at a corporate or Project level. The
system is designed to identify, assess and manage risks and impacts in respect to the Project on an
ongoing basis. The system consists of manuals and related source documents, including policies,

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management programs and plans, procedures, requirements, performance indicators,

responsibilities, training and periodic audits and inspections with respect to environmental or social
issues, including Stakeholder Engagement and grievance mechanisms. It is the overriding framework
by which an ESMP and/or Equator Principles (AP) is implemented. The term may refer to the system
for the construction phase or the operational phase of the Project, or to both as the context may
require.

Equator Principles Action Plan (EPAP), or Environmental and Social Action Plan (ESAP), or Action
Plan, is prepared, as a result of the EPFI’s due diligence process, to describe and prioritise the actions
needed to address any gaps in the Assessment Documentation, ESMPs, the ESMS, or Stakeholder
Engagement process documentation to bring the Project in line with applicable standards as defined
in the Equator Principles. The EPAP is typically tabular in form and lists distinct actions from
mitigation measures to follow-up studies or plans that complement the Assessment.

Equator Principles Association is the unincorporated association of member EPFIs whose object is
the management, administration and development of the Equator Principles. The Equator Principles
Association Secretariat manages the day to day running of the Equator Principles Association
including the collation of EPFIs Project name reporting data. For more information, go to the Equator
Principles Association website.

Export Finance (also known as Export Credits) is an insurance, guarantee or financing arrangement
which enables a foreign buyer of exported goods and/or services to defer payment over a period of
time. Export credits are generally divided into short-term, medium-term (usually two to five years
repayment) and long-term (usually over five years).

Financial Close is defined as the date on which all conditions precedent to initial drawing of the debt
have been satisfied or waived.

Financial Threshold criteria are applied as part of the Equator Principles framework due to the
significant costs involved in applying the framework (including due diligence and seeking advice from
an Independent Environmental and Social Consultant) and the complex nature of large projects,
where potential adverse environmental and social risks are likely to be higher.

Human Rights are described in international standards aimed at securing dignity and equality for all.
Every human being is entitled to enjoy them without discrimination. As a minimum, relevant human
rights are those expressed in the International Bill of Human Rights – meaning the Universal
Declaration of Human Rights, the International Covenant on Civil and Political Rights and the
International Covenant on Economic, Social and Cultural Rights and the principles concerning

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fundamental rights set out in the International Labour Organisation’s Declaration on Fundamental
Principles and Rights at Work.

Independent Environmental and Social Consultant is a qualified independent firm or consultant

(not directly tied to the client) acceptable to the EPFI.

Independent Review is a review of the Assessment Documentation including the ESMPs, ESMS, and
Stakeholder Engagement process documentation carried out by an Independent Environmental and
Social Consultant.

Indigenous Peoples: There is no universally accepted definition of “Indigenous Peoples.” Indigenous

Peoples may be referred to in different countries by such terms as “Indigenous ethnic minorities,”
“aboriginals,” “hill tribes,” “minority nationalities,” “scheduled tribes,” “first nations,” or “tribal
groups.” As in IFC Performance Standard 7, the term “Indigenous Peoples” is used here in a generic
sense to refer to a distinct social and cultural group possessing the following characteristics in
varying degrees:
• “Self-identification as members of a distinct indigenous cultural group and recognition
of this identity by others;
• “Collective attachment to geographically distinct habitats or ancestral territories in the
project area and to the natural resources in these habitats and territories;
• “Customary cultural, economic, social, or political institutions that are separate from
those of the mainstream society or culture; or
• “A distinct language or dialect, often different from the official language or languages of
the country or region in which they reside.”

United Nations (UN) Human Rights Conventions, such as the UN Declaration on the Rights of
Indigenous Peoples, form the core of international instruments that provide the rights framework
for members of the world's Indigenous Peoples. In addition, some countries have passed legislation
or ratified other international or regional conventions for the protection of Indigenous Peoples, that
must be taken account of in their respective jurisdictions.

Known Use of Proceeds is the information provided by the client on how the borrowings will be
used.

Non-Designated Countries are those countries not found on the list of Designated Countries on the
Equator Principles Association website (see also Designated Countries).

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Operational Control (see Effective Operational Control)

Other Stakeholders are those not directly affected by the Project but that have an interest in it. They
could include national and local authorities, neighbouring Projects, and/or non-governmental
organisations.

A Project is a development in any sector at an identified location (the location does not need to be
contiguous – a Project may be located over one or more geographic areas). It includes an expansion
or upgrade of an existing operation. Examples of Projects that trigger the Equator Principles include,
but are not limited to; a power plant, mine, oil and gas Projects, chemical plant, infrastructure
development, manufacturing plant, large scale real estate development, real estate development in
a Sensitive Area, or any other Project that creates significant environmental and/or social risks and
impacts. Projects can include new developments, expansions, or upgrade both in greenfield area or
previously developed areas. In the case of Export Credit Agency supported transactions, the new
commercial, infrastructure or industrial undertaking to which the export is intended will be
considered the Project.

Project Completion is the date at which a Project has been finished, functions, and performs
according to certain pre-defined measures (usually defined in a completion test). After this date the
Project’s cash flows become the primary method of repayment.

Project Finance is a method of financing in which the lender looks primarily to the revenues
generated by a Project, both as the source of repayment and as security for the exposure. This type
of financing is usually for large, complex and expensive installations that might include, for example,
power plants, chemical processing plants, mines, transportation infrastructure, environment, and
telecommunications infrastructure. In such transactions, the lender is usually paid solely or almost
exclusively out of the money generated by the contracts for the Project’s output, such as the
electricity sold by a power plant. The client is usually a special purpose vehicle that is not permitted
to perform any function other than developing, owning, and operating the installation. The
consequence is that repayment depends primarily on the Project’s cash flow and on the collateral
value of the Project’s assets. For reference go to: “Basel Committee on Banking Supervision,
International Convergence of Capital Measurement and Capital Standards ("Basel II")”, November
2005. Reserve-Based Financing in extractive sectors that is non-recourse and where the proceeds are
used to develop one particular reserve (e.g. an oil field or a mine) is considered to be a Project
Finance transaction covered under the Equator Principles.

Project Finance Advisory Services is the provision of advice on the potential financing of a
development where one of the options may be Project Finance.

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Project-Related Corporate Loans are corporate loans, made to business entities (either privately,
publicly, or state-owned or controlled) related to a Project, either a new development or expansion
(e.g. where there is an expanded footprint), where the Known Use of Proceeds is related to a Project
in one of the following ways:

a. The lender looks primarily to the revenues generated by the Project as the source of
repayment (as in Project Finance) and where security exists in the form of a corporate or
parent company guarantee;

b. Documentation for the loan indicates that the majority of the proceeds of the total loan are
directed to the Project. Such documentation may include the term sheet, information
memorandum, credit agreement, or other representations provided by the client into its
intended use of proceeds for the loan.

It includes loans to government-owned corporations and other legal entities created by a

government to undertake commercial activities on behalf of the government. For all Category A and,
as appropriate, Category B Projects, Project-Related Corporate Loans shall include loans to national,
regional or local governments, governmental ministries and agencies.

Project-Related Corporate Loans shall include Export Finance in the form of Buyer Credit, but
exclude Export Finance in the form of Supplier Credit (as the client has no Effective Operational
Control). Furthermore, Project-Related Corporate Loans exclude other financial instruments that do
not finance an underlying Project, such as Asset Finance, hedging, leasing, letters of credit, general
corporate purposes loans, and general working capital expenditures loans used to maintain a
company’s operations.

Refinance is the process of replacing an existing loan with a new loan, where the new loan will be
used to pay out (retire) an existing loan, and that loan is not near or in default.

Scope 1 Emissions are direct GHG emissions from the facilities owned or controlled within the
physical Project boundary.

Scope 2 Emissions are indirect GHG emissions associated with the off-site production of energy used
by the Project.

Sensitive Area is an area of international, national or regional importance, such as wetlands, forests
with high biodiversity value, areas of archaeological or cultural significance, areas of importance for
Indigenous Peoples or other vulnerable groups, National Parks and other protected areas identified

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by national or international law.

Stakeholder Engagement refers to IFC Performance Standards provisions on external

communication, environmental and social information disclosure, participation, informed
consultation, and grievance mechanisms. For the Equator Principles, Stakeholder Engagement also
refers to the overall requirements described under Principle 5.

Supplier Credit is a medium/long term Export Finance credit that is extended by the exporter to the
overseas buyer.

TCFD Recommendations are the recommendations of the Task Force on Climate-related Financial
Disclosures published on 15 June 2017. For more information, see https://www.fsbtcfd.org/.

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