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7 July 2006

Westpac commits to reviewed Equator Principles

Westpac Banking Corporation today joined a number of leading financial institutions from around the world to announce the launch of the revised "Equator Principles," a voluntary set of guidelines which have been developed for managing social and environmental issues relating to the financing of development projects.

Westpac's Head of Project & Structured Debt, Mike Cleary, said: "Since the adoption of the Equator Principles in June 2003 Westpac has closed 18 project finance transactions that adhere to the guidelines, with a loan value of $1.3billion.

"As a founding signatory, and the only Australian bank to have adopted the principles, Westpac remains committed to promoting responsible project financing globally.

"We were involved in the recent review of the Equator Principles, and are confident the changes will continue to enable signatories to better manage social and environmental issues relating to the financing of development projects.

"We continue to encourage other Australian financial institutions to adopt these principles."

The revisions reflect the experiences of the 40 financial institutions around the world that currently apply the principles and underscore how far the financial sector has progressed in embedding in the project finance arena a common set of best practices to manage social and environmental risks related to project financing.

The Equator Principles are based on the policies and guidelines of the World Bank and International Finance Corporation (IFC). Extensive advice and guidance was received from IFC, the private-sector investment arm of the World Bank, clients, civil society groups and official development agencies in revising the Equator Principles.

In adopting the Equator Principles, a bank undertakes to provide loans only to those projects whose sponsors can demonstrate to the satisfaction of the bank their ability and willingness to comply with comprehensive processes aimed at ensuring that projects are developed in a socially responsible manner and according to sound environmental management practices.

The Equator Principles have been revised in the following ways:

• The Principles apply to all project financings with capital costs above USD 10 million. This threshold was lowered from USD 50 million.
• The Principles now also apply to project finance advisory activities
• The revised Principles now specifically cover upgrades or expansions of existing projects where the additional environmental or social impacts are significant
• The approach in applying the Principles to countries with existing high standards for environmental and social issues has been streamlined
• Each EPFI is now required to report on the progress and performance of Equator Principles' implementation on an annual basis
• Stronger and better social and environmental standards, including more robust public consultation standards