Responsible finance and investment
Equator Principles Financial Institutions
“The Equator Principles (EPs) is a risk management framework adopted by financial institutions for determining, assessing and managing environmental and social risk in projects, and is primarily intended to provide a minimum standard for due diligence to support responsible risk decision-making. The EPs apply globally, to all industry sectors.” (The Equator Principles)
112 financial institutions in 38 countries have adopted the Equator Principles, among them 6 Brazilian banks, 2 Mexican banks and one bank each in Argentina, Colombia, Mexico, Peru and Uruguay. Browse this table to see all current Equator Principles Financial Institutions (EPFIs) with links to their annual ‘EPFI Reporting’.
International Finance Corporation’s (IFC) Performance Standards
“IFC's Environmental and Social Performance Standards define IFC clients' responsibilities for managing their environmental and social risks.” (IFC Performance Standards)
The IFC's Sustainability Framework includes eight the Performance Standards on (1) Risk Management, (2) Labour, (3) Resource Efficiency, (4) Community, (5) Land Resettlement, (6) Biodiversity, (7) Indigenous Peoples and (8) Cultural Heritage.
The IFC’s Performance Standards apply to all projects from investment and advisory clients undergoing IFC's initial credit review process after 1 January, 2012.
EU taxonomy for sustainable activities
In July 2020 the EU Taxonomy Regulation came into force. The taxonomy provides a common classification system for sustainable economic activities, which will make it easier to direct finance towards projects and activities in line with its low-carbon targets and the European Green Deal. By “providing appropriate definitions to companies, investors and policymakers on which economic activities can be considered environmentally sustainable, it is expected to create security for investors, protect private investors from greenwashing, help companies to plan the transition, mitigate market fragmentation and eventually help shift investments where they are most needed.”
European Bank for Reconstruction and Development (EBRD) Performance Requirements
EBRD financed projects are expected to be designed and operated in compliance with good international practices relating to sustainable development. They have defined ten performance requirements covering key areas of environmental and social issues and impacts. The performance requirements provide a solid base from which mining investors can improve the sustainability of their business operations.
ESG risk ratings and access to finance
The finance sector is increasingly taking into account the environmental (E), social (S) and governance (G) effects of business and the material risks that stem from them for investment value. For example, companies can face reputational damage, disruption of operations and shareholder action over their ESG performance. Such risks are increasingly being assessed by private investors and institutional investors. The mining sector is deemed to face high ESG risks. As ESG risk assessments and their public disclosure increase, the mining sector will need to improve its ESG performance to maintain its access to finance.
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