More about the Equator Principles

The Equator Principles (EP) were launched in June 2003 and have undergone several revisions resulting in their fourth version published in November 2019 under the name of Equator Principles 4 (EP4). Successive revisions have made it possible in particular to broaden the scope of application to several financial products relating to projects and to gradually strengthen the criteria of evaluation and management of environmental and social impacts of funded projects.

The evaluation of the projects 

The project’s categorising and possible classification for monitoring as sensitive are used to determine specific requirements with regard to the borrowers. These specific requirements may include consultants’ analyses and additional studies, mandatory actions and including environmental and social action plans as contractual obligations in loan agreements.

Analysis of social and environmental aspects is integrated into regular process of credit requests, and is part of the discussion between relationship officers and the risk department. Compliance with commitments is monitored during the structuring phase, and then at least yearly during the life of the loans.

However, final validation of these analyses (EP category and classification for monitoring as sensitive) is made by the CERES Committee*. It gives an opinion prior to any credit being extended for category A projects, or in the event of disagreement among those involved in analyzing a file. Moreover, category A projects must be approved by the Counterparty Risk Committee.

*CERES Committee: The CERES Committee is headed by Crédit Agricole CIB's Head of Compliance and gathers 5 voting members (or their representative):

- the president,

- the Head of Corporate Social Responsibility, 

- the Head of Energy, Commodity, Infrastructure, Securitization and Global Diversified Industries sector within Risk and Permanent Control,

- the head of Sectors and Country Strategies – Credit Delegation within Global Coverage Organisation

- the Head of Oil & gas sector within Structured Finance.

The legal department and the communications direction are also represented in this committee, as well as the Corporate Social Responsibility Department and Economic Research Department of Crédit Agricole SA.

Teams and controlling bodies within Crédit Agrciole CIB

Crédit Agricole CIB has developed a genuine sustainable development culture by making operational project and export finance teams more accountable. A number of teams and controlling bodies thus participate in project analysis and follow-up.

  • Project finance teams have primary responsibility for day-to-day compliance analyses (establishing rating matrices, contact with sponsors and outside consultants, negotiating lending terms, etc.).
     
  • A network of local correspondents, made up of project finance operational staff, helps the relationship managers with complex files. Linking the sales force and control and validation bodies, this network ensures a first level of consistency in the application of the Equator Principles.
     
  • The Export Finance business line strengthened its system in 2020 with the creation of a specialist position providing support to business managers in the assessment and management of environmental and social risks related to export financing subject to Equator Principles application.
     
  • Crédit Agricole S.A.’s Economic Research is carried out by consulting engineers who specialize in industrial sectors, contributing skills and understanding of complex technical and environmental problems. They give impartial, professional opinions, which are especially important for category A projects and those monitored as sensitive.
     
  • The CERES Committee is responsible for overseeing implementation of and compliance with the Equator Principles. Born in 2005 under the Equator Principles Committee name, it validates EP categories after auditing by Economic Research. It issues recommendations for category A files prior to credit decisions. The CERES Committee also monitors the progress of category A files and those monitored as sensitive.
     
  • A Coordination unit, based in Montrouge, manages practical implementation of this organization (tools, training, procedures, etc.) with the assistance of the Corporate Social Responsibility team, and provides support to the local correspondent network.
     
  • The Corporate Social Responsibility team provides assistance in the most complex cases, ensures that methodologies and tools are used consistently. In liaison with the Coordination Unit, and represents Crédit Agricole CIB in dealing with the Equator Principles Association and its members, the International Finance Corporation and civil society.

 

The evaluation of the projects

The evaluation of the projects