Equator Principles - Criticism of The Principles

Criticism of The Principles

NGOs have generally welcomed the Principles, but some have expressed concerns over their integrity.

One of these is that the Principles will not make a real difference. They argue the case of the Baku-Tbilisi-Ceyhan pipeline, which in 2004 was financed by eight Equator Principles' banks and the IFC despite an NGO assessment which alleged 127 breaches of the Principles. The banks and IFC said they were confident that the Equator Principles were followed, and said an independent consultant had confirmed this assessment.

Another expressed concern was that the banks might lobby IFC to weaken its standards on which the Principles are based. The banks point out that IFC revised and strengthened its policies in 2006 and that the banks correspondingly strengthened the Equator Principles in the same year. Other criticisms include alleged lack of enforcement and accountability, free-riders, and that the scope of the principles is limited to project finance only. Several banks have sought to address these concerns by publishing summaries of their Equator Principles screening, including the number of projects they turned down for noncompliance.

In 2005, some NGOs said that one of the adopting banks, ABN AMRO (before it was split up in 2010), was the most climate-unfriendly bank in the Netherlands, with estimated annual indirect CO2-emissions of almost 250 million tonnes in 2005 from industries to which it provides financial services. NGOs said this was just over the annual CO2-emissions of the Netherlands and almost 1% of the total annual worldwide CO2-emissions at the time. ABN AMRO defended its environmental record and announced steps to reduce its direct emissions, but some NGOs say it is the indirect emissions through their clients that make global banks such important targets in climate change.