Equator Principles 
 

 Equator Principles 

Background

In March 2009 EFIC chose to adopt the Equator Principles. The Equator Principles are used by adopting financial institutions to manage environmental and social risk in projects.

More information about the Equator Principles is available on the Equator Principles website.

Reporting

Principle 10 of the Equator Principles requires reporting on implementation of the Equator Principles, taking into account appropriate confidentiality considerations. EFIC’s reporting is provided according to the Australian financial year which runs from July in one year to June in the following year. This update is relevant for the 2012-13 financial year.

EFIC’s Procedure provides information on:

  • the environmental and social review process for all EFIC transactions including project finance and project-related corporate loans. EFIC does not provide bridge loans or project finance advisory services
  • our approval process
  • our approach to including conditions covering environmental and social issues in EFIC’s transaction documents
  • how the Equator Principles are incorporated into the Procedure.

Equator Principles reviews are undertaken by EFIC’s Environmental and Technical Review staff who are in our Credit Department. Environmental and social risk evaluations are a distinct risk element within EFIC’s decision making. Transactions associated with Category A projects located outside Australia require approval of the EFIC Board.

During the 2012-13 financial year internal training was made available to EFIC staff on the Equator Principles and the IFC Performance Standards.

The Table below summarises the number of transactions signed over the past three financial years. It includes details of all significant EFIC transactions and, from 2012-13, separately identifies project finance and project-related corporate loans. The location, industry type, sector and results of screening and classification for individual projects supported by EFIC (including project finance) are provided in EFIC’s Annual Report and on EFIC’s transaction register.

Environmental and social review summary

Financial year Environmental / social impact category
  Category A Category B Category C
2012–13      
All facilities 1 1 6
Project finance 1 0 0
Project-related corporate finance 0 0 0
2011–12
All facilities 2 5 7
Project finance 1 0 0
2010–11
All facilities 0 2 22
Project finance 0 0 0

EFIC supported one transaction associated with a Category A project in the 2012-2013 financial year, the Ichthys LNG project located near Darwin Australia. That project required environmental approvals under both Northern Territory and Commonwealth legislation and both governments provided public reports on the project’s potential environmental and social impacts. An independent adviser was available to the lenders during the due diligence and monitoring phases.

EFIC reports not only transactions that have reached financial close, but also projects subject to the Equator Principles that it has screened during the financial year. EFIC considers a project to have been ‘screened’ if it received a mandate or equivalent for that project. No project finance or project-related corporate loan transactions were screened during the 2012-13 financial year.