Sustainability Language

Sustainable finance & investment

Equator Principles

A financial-industry benchmark for determining, assessing and managing environmental and social risk in project finance.

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Definition

The Equator Principles are a risk-management framework, adopted by financial institutions since 2003, for identifying, assessing and managing environmental and social risks when financing projects. They apply primarily to project finance above USD 10 million in total capital costs, plus related corporate loans, bridge loans and advisory mandates.

References

HSBC

application scope, adoption history

Overview

What it means

Signatory institutions commit to applying the Principles — based on IFC Performance Standards and World Bank Group EHS Guidelines — including categorising projects by risk, requiring assessment and action plans, covenants and monitoring for higher-risk deals. The fourth iteration, EP4, took effect in October 2020; the EP Association legal entity was dissolved in 2024, with signatories continuing collectively.

How it is used

Used by over a hundred banks in project-finance credit processes worldwide; referenced in syndications and export-credit practice.

Why it matters

The Principles set the de facto global standard for environmental and social risk management in project finance.

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