Equator Principles

The Equator Principles (EP) are a voluntary set of standards adopted by financial institutions for determining, assessing and managing environmental and social risks in project-related transactions. NatWest Group has been a member since 2003.

All transactions that fall within the scope of EP undergo an initial environmental and social risk screening (using a questionnaire). Typically for project finance deals, a suitably qualified technical advisor is engaged, who provides an opinion on potential environmental and social impacts of the project and compliance with the EP.

Additionally, such transactions are subject to enhanced due diligence by an ESE advisory team. This includes a review of the project-related transaction for compliance with the EP. The end result is documented and forms part of the credit application pack submitted for approval. The EP use a scale of categorisation – A to C – to determine the scale of environmental and social impacts, with Category A being projects with the highest impacts and Category C, the lowest. Depending on the risk category, the prospective financing may be subject to a further and separate review by a Reputational Risk Committee.

The requirements of the EP are embedded in the bank’s ESE Risk Policy.

The reporting period for data and implementation is from 1 January 2020 to 31 December 2020 (2019 data is provided for comparison).

During this period, six Project Finance transactions to which we had applied the EP reached financial close. Five of the deals were located in Europe, and one deal was located in the US. In comparison, the total number of project-related transactions financed in 2019 was ten, six of which were located in Europe with the remaining four being located in the US.