Environmental, Social, and Corporate Governance (ESG) refers to the three central factors in measuring sustainability and societal impact of an investment in a company or business. An update of one of the main frameworks used in ESG, the Equator Principles (the EPs), is scheduled to take effect on Oct. 1, 2020. This latest iteration, “EP4,” includes significant changes from its predecessor, EPIII, with potentially significant implications for financial institutions and their clients seeking to finance projects. The EPs have been broadly applied to large-scale infrastructure projects as well as to projects in the extractive and energy industries. Given the Oct. 1 effective date, companies in those industries should take a close look at EP4 and consider its implications, particularly for projects located in developing economies. Importantly, EP4 also extends certain obligations to “designated countries” such as the United States, potentially requiring assurance of steps beyond compliance with those countries’ legal requirements.
Click here to read the full GT Alert, “Enhanced Equator Principles – What to Know Before Oct. 1.”