The Equator Principles
The Equator Principles is a risk management framework, adopted by financial institutions, for determining, assessing and managing environmental and social risk in projects. Nordea adopted the Equator Principles (EP) in 2007. Our analysts and other relevant staff have been trained in Nordea’s internal EP process.
The ten principles contained in the EP are organised into five workflow steps:
- Initial project review
- Project appraisal
- Project negotiation, commitment
- External reporting
Nordea evaluates the borrower’s capacity to adequately identify, prevent, mitigate and manage key environmental and social risks and impacts of the project based on documentation provided by the borrower, independent environmental and social consultants and in certain cases site visits.
Nordea includes ESG matters in the initial business selection process. The detailed project appraisal and internal EP reviews are carried out by ESG Analysts working close to Nordea’s credit process. These persons have relevant education and working experience to support performing the task. The EP reviewer, when necessary, also proposes conditions related to environmental and social issues for loan agreements, participates in drafting the scope of work for independent consultants, communicates with other relevant project parties and monitors project compliance with EP. In the above tasks the EP reviewer co-operates with the rest of Nordea's deal team responsible for the financing of the transaction in question.
The EP reviewer presents the EP transactions to Nordea's Equator Principles Sounding Board (EPSB), which either supports or does not support the transaction based on EP compliance. The EPSB has 4-6 members who are senior experts and managers from relevant business and risk management units. EPSB’s statements are included in the evaluation of the relevant credit committee deciding on the financing of the transaction.
Nordea monitors the performance of all active projects in its portfolio to ensure compliance with environmental, social and other conditions. In case of any non-compliance, Nordea will determine an appropriate course of action together with the other lenders.
Nordea reports annually on transactions that have reached financial close. See our EP reports here
For more information about the Equator Principles, read here.