Equator Principles: Global banks failing to uphold environmental and social risk agreements
An investor coalition representing more than $2.9trn has urged global banks to strengthen efforts that protect the rights of indigenous people and the environment that they rely on.
Led by Boston Common Asset Management, the coalition has urged global banks to pledge to and strengthen the Equator Principles, a voluntary global environmental and social risk management framework for financial decision-making.
The coalition has issued a statement to global banks claiming that current practices and decision-making fail in mitigating reputation, financial and litigation risks when it comes to financing large infrastructure projects. The controversy surrounding the Dakota Access Pipeline, in which indigenous groups argued that the project was an environmental hazard for the Standing Rock and Cheyenne River Sioux areas, is used as a prime example of banks failing to analysis social and environmental risks.
Boston Common Asset Management’s managing director, Steven Heim, said: “Global banks face a critical decision: to strengthen the Equator Principles or otherwise fail to respect the rights of Indigenous Peoples, thereby increasing risks for banks and investors.
“In line with the United Nations Declaration on the Rights of Indigenous Peoples, Indigenous Peoples have the right to withhold consent from projects. The current iteration of the Equator Principles falls short of protecting these rights post-Dakota Access Pipeline.”
Boston Common Asset Management is joined by 50 investors and organisations including CalPERS, the New York State Comptroller, the Comptroller of the City of New York, NEI Investments, SHARE, and investor organizations representing Indigenous Peoples such as National Aboriginal Trust Officers Association of Canada and the Oneida Trust Committee of the Oneida Nation of Wisconsin, in signing the statement.
The Dakota Access Pipeline has been operational since June 2017 and is owned by the Energy Transfer Partners (ETP). ETP was granted a permit by US President Donald Trump, who ignored objections from indigenous tribes and environmentalists that the project would pollute waterways.
The Standing Rock and Cheyenne Sioux have since attempted to sue the US Army Corps of Engineers, arguing that the tribes had not been properly consulted.
Banking on change
In written comments to the Equator Principles Association, the investors forming the coalition noted that 13 of the 17 banks that financed the Dakota Access Pipeline project were also signatories to the Equator Principles.
The coalition has called for banks to provide stakeholder feedback on the draft Equator Principles “EP4”, that was released on June 24, 2019. The statement will be open for new signatories until October 11, 2019.
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