New research into implementation of the Equator Principles – banks' rules for financing large infrastructure projects, followed by 108 financial institutions – has found that the existence of a stakeholder engagement process or project-level complaints mechanisms cannot be evidenced in 24 out of 37 projects analysed (65%). In 16 cases (43%), neither a stakeholder engagement process nor a project-level complaints mechanism could be found. The projects analysed are focused in high-risk sectors such as oil, gas, hydropower and mining.

BankTrack’s new briefing paper, “Trust us, we’re Equator Banks”, details that in several instances, banks responded to the initial findings by insisting that stakeholder engagement or grievance processes are in place on the ground, but that the bank financing the project is unable to provide any references or evidence to support this, including for reasons of ‘client confidentiality’.

The research represents the first systematic evaluation of whether aspects of the Equator Principles are being followed. The results call into question the extent to which the Equator Principles are actually being adhered to on the ground.  

Following the results of this research, BankTrack is calling on the Equator Principles Association (EPA) to ensure that compliance with the Principles does not need to be taken on trust, and to ensure a Compliance Report is made publicly available by banks setting out how each of the ten principles have been implemented for each project financed under the Principles, with links to grievance processes and other key documents. Where EPFIs repeatedly do not show evidence of EP compliance, they should be de-listed.

BankTrack also continues to urge the EPA to create an initiative-level accountability mechanism which allows project affected communities, or their legitimate representatives, to raise instances of alleged non-compliance with the EPs by Equator banks. The low level of apparent compliance with the EPs shown by this research adds strength to the argument for such an initiative-level mechanism.

BankTrack’s Hannah Greep, the author of the briefing paper, commented: “The Equator Principles Association and signatory banks should not be asking its stakeholders to take Equator Principles compliance on trust, particularly given the record of disastrous projects like the Dakota Access Pipeline in the US and the Agua Zarca dam in Honduras being financed under the Principles. As the banks prepare to begin implementing the new version of the Principles, EP4, in October, we will need to see evidence that they are being implemented in full. It is in the interests of those banks that do follow their own rules not to allow free riders.”

Under the Equator Principles, all Category A and B projects (the highest risk categories) are required to have an ongoing process of effective stakeholder engagement with affected communities and other stakeholders. Under Principle 6, they require all Category A projects and “as appropriate” Category B Projects, to establish a project-level grievance mechanism which is designed to receive and facilitate resolution of concerns and grievances about the project’s environmental and social performance.