The latest iteration of the Equator Principles (EPs), effective October 1, 2020, broadens the EPs’ scope of application and requires greater scrutiny and reporting of the impact that both new and existing projects — including energy production — may have on issues such as climate change and human rights. Over 110 financial institutions (EPFIs) in almost 40 countries have adopted the EPs as a mechanism for evaluating and addressing environmental and social risk when providing financing to certain projects. Even financial institutions that have not adopted the EPs may look to them as guidance for developing or updating diligence standards, especially given the increasing corporate focus on environmental, social and governance (ESG) matters.
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