About forty international banks, controlling over 80 percent of all project financing around the world, have agreed to further strengthen a set of environmental and social standards known as the Equator Principles. In practice, that's taking responsible investing to a major new level.
How major? The agreement means most large global projects over $10 million will now be assessed for their impact on the environment or local population before receiving financing. As one Citigroup official told Reuters: "The Principles created a de facto global standard for the project finance business." A World Resources Institute official applauded the move, saying this showed global lenders are "creating better mechanisms for local communities to have their say before projects go forward on their land."
The agreement last week has been in the making for three years. In 2003, 10 financial institutions announced they would adopt IFC environmental and social guidelines for project financing. Since then, IFC has developed new guidelines, and the ranks of adherents to the Equator Principles have grown.
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