Ramboll authors new Equator Principles guidance

Ramboll has authored the newly published guidance note to support the effective and consistent application of the Equator Principles (EP), on behalf of the Equator Principles Association.

The document provides guidance specifically in relation to Independent Environmental and Social Consultants (IESC) undertaking Environmental and Social Due Diligence (ESDD) and monitoring on behalf of Equator Principle Financial Institutions (EPFI), as well as the development of Environmental and Social Impact Assessments (ESIA) by the borrower.

The note now represents the global best practice for undertaking environmental, social and sustainability advisory work for global financial institutions. It will be used by EPFI when they are appointing the IESC and during their internal due diligence to confirm the IESC scope and terms of engagement when taking reliance on their IESC ESDD report.

Also, borrowers will now have access to a comprehensive guideline for the scoping and procuring of ESIA services for projects that have, or likely to have, financing from EPFIs.

Ramboll was once again chosen by the Equator Principles Association to author the guidance note, having previously authored the Guidance Note on Implementation of the Equator Principles During the Covid-19 Pandemic (June 2020).

Ramboll has vast experience, working for both lenders and borrowers/project owners, assisting projects achieve financing as well as reducing the environmental and social impacts of development projects around the world.

The new guidance note will help EPFIs (currently comprising 134 financial institutions in 38 countries), their customers (borrowers, sponsors) and advisors with effective management of environmental and social aspects of finance deals while minimising commercial, business and ethical risks, in order to facilitate sustainable and accountable developments around the world.

Specifically, it will assist EPFI navigating the complexities of the Independent Review (mandatory for Category A Projects), guiding the appointment and procurement of IESC as well monitoring its mandate and performance. The guidance also assists project borrowers and sponsors who intend to seek international financing, with environmental and social assessment and management including scoping, procurement and delivery of ESIA and incorporation of its findings to project implementation.

Stepan Ruzicka, Ramboll’s Sustainable Finance lead, and guidance note co-author, said, “The guidance reflects significant contributions from a range of EPFIs that we consulted during its development. It is ultimately based on the approach, developed by Ramboll and working with Jon Hancox (current interim COO of the EPA) over the last five years, to clarify and streamline the effective application of the Independent Review Mandate on EP finance deals. We now apply this approach to the majority of our IESC projects. We are grateful to our lender clients for their support during its development.

Environmental and social assessment is a key requirement of the Equator Principles for the identification and assessment of the environmental and social risks. John Miragliotta, Ramboll’s Asia Pacific Impact Assessment Principal and co-author of the ESIA guidance, promotes the benefits of a well-planned and executed ESIA that provides the basis for effective environmental and social risk management. The guidance will assist proponents in developing an ESIA that communicates how environmental and social performance standards applied by regulators and EPFIs will be achieved, and how the views and concerns of potentially affected stakeholders have been considered.

The objectives of an ESIA include the consideration in the early planning and design phase of potential impacts of a project through implementing the mitigation hierarchy. A good ESIA is undertaken at a stage of the project where there is the greatest opportunity for avoidance of potential significant impacts through design, siting and selection of operating strategy. Applying the mitigation hierarchy effectively requires an interactive approach between the ESIA team and the project design team to identify the appropriate mitigation measures for significant impacts and to reassess those impacts on the basis of amended design.