Equator Principles

ESG - Environmental, social and governance

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In October 2007, EDC joined a growing list of international financial institutions committed to the Equator Principles, a financial industry benchmark for the determination, assessment and management of social and environmental risk in project financing.

Prior to adopting the Equator Principles, and since 2003, EDC has also been applying the Organisation of Economic Co-Operation and Development’s Common Approaches on the Environment, which binds export credit agencies to specific environmental and social review practices. EDC views the Equator Principles as a complement to the Common Approaches, and enables EDC to bridge the leading practices of both ECAs and commercial financial institutions. EDC’s other commitments to assessing projects is cemented in its Environmental and Social Risk Management Policy Framework and the EDC Environmental and Social Review Directive (ESRD). The ESRD sets out the process by which EDC will assess the environmental and social impacts (and mitigation measures) of a project, and is a legally-binding requirement for EDC under the laws of Canada.

The Equator Principles, the Common Approaches, and the ESRD are aligned in the requirement for projects to meet the elements of the same international standards, namely the International Finance Corporation’s Performance Standards on Social and Environmental Sustainability and sector-specific Environmental, Health, and Safety Guidelines. By aligning these requirements, clients of ECAs and commercial financial institutions benefit from meeting the same standards when undertaking environmental and social impact assessments.

Further detail on EDC’s project review process is described in Understanding EDC’s Project Review Process.

EDC’s implementation of the Equator Principles

Dedicated resources

EDC has a dedicated team of environmental and social risk specialists, tasked with implementing EDC’s environmental and social review processes and procedures, including conducting reviews under the Equator Principles. The ESG Advisory team consists of environmental and social advisors, reporting to the ESG Advisory Directors and the Vice-President of ESG Advisory. With different backgrounds including environmental science, biology, engineering, business, and international development, the team draws on a breadth of experience and knowledge relevant to the environmental and social risk assessment field.

Integration of Environmental and Social Review

Projects are examined by ESG Advisory for potential adverse environmental and social impacts.

Initially, EDC has various forums in place including team alignment meetings, huddles, and a triaging committee, that help identify deal related issues. At this point in time, ESG Advisory then looks for areas that may not be aligned with our internal policies on human rights, environmental and social responsibility. Depending on the degree to which projects measure up to the internationally recognized standards noted above, we will either engage project sponsors in further dialogue, discuss ways to deal with any serious issues, or, if gaps cannot be addressed, we decline the project outright.

Should we proceed to the next stage, EDC takes an in-depth look at the project design and evaluates the Environmental and Social Impact Assessment provided by the project developer/sponsor. Information requirements and the depth of EDC’s review are linked to the project categorization: Category A, B or C. In some cases, a lender’s group, of which EDC is a member, hires a number of specialized advisors to assist with a more detailed review. An independent environmental and social expert will provide unbiased input about the project’s potential impacts, adequacy of the mitigation measures and the project’s ability to meet international standards. Transactions supporting projects are reviewed by senior leadership during the due diligence process prior to signing of the loan.

ESG Advisory also ensures the project developer/sponsor formulates an environmental and social action plan. The plan will describe and prioritize time-limited commitments to complete any additional measures that the project will satisfy EDC and that it has fully met the requirements of the IFC Performance Standards. If the outcome of this stage is favourable, the environmental and social review must be authorized by EDC's President. After the loan agreement is signed, EDC continues to monitor the project for compliance.

For a list of transactions that underwent a review under the Equator Principles, see table below.​

Equator Principles transactions reaching financial close during 2023*

Six Project Finance transactions (PF) and zero Project-Related Corporate Loan (PRCL) subject to the Equator Principles reached financial close during 2023.

​Project Name ​Project Description Sector Region Project in Designated Country Project Finance (PF) or Project-Related Corporate Loan (PRCL) Independent Review Performed International Standards Applied
​Category A Projects​
SunZia Wind & Transmission Projects Development, construction and operation of a 3.5GW wind generation facility and high voltage direct current transmission project. Power Americas (USA) Yes PF Yes Host Country Standards, IFC Performance Standards
Hai Long 2 and Hai Long 3 Offshore Wind Farms Design, development, construction, installation, testing, commissioning, operation, maintenance and decommissioning or repowering of the 532MW Hai Long 2 and 512MW Hai Long 3 offshore wind farms (together, Hai Long). Power Asia (Taiwan) No PF Yes IFC Performance Standards, Host Country Standards
Baltic Power Offshore Wind Project Design, development, construction, installation, testing, commissioning, operation and maintenance of a 1.1GW offshore wind project in the Baltic Sea. Power Europe
(Poland)		 Yes PF Yes IFC Performance Standards, Host Country Standards
Category B Projects​
Moraine Sands Wind Project Construction and operation of a wind power project located in Illinois. Power Americas (USA) Yes PF No Host Country Standards
Boswell Wind Project Construction and operation of a greenfield 330 MW wind project in Wyoming. Power Americas (USA) Yes PF No Host Country Standards
Delilah Solar Energy I Designing, developing, building, installing, testing, commissioning, operating, maintaining and de‑commissioning the 300 MW Delilah Solar Energy I project. Power Americas (USA) Yes PF Yes Host Country Standards


Host Country Standards, IFC Performance Standards

A summary of EDC’s assessment of the environmental and social impacts is prepared for all Category A projects. Those reviews can be found in this table.

1 Equator Principles III and IV requires reporting on transactions which have reached financial close.  For additional detail see ‘The Equator Principles, June 2013’, and ‘The Equator Principles, July 2020’. 

2 Designated Countries are those countries deemed to have robust environmental and social governance, legislation systems and institutional capacity designed to protect their people and the natural environment.

3 Project-Related Corporate Loans are corporate loans, made to business entities related to a single Project, either a new development or expansion, where the Known Use of Proceeds is related to a single Project. For additional detail see ‘The Equator Principles, June 2013’, and ‘The Equator Principles, July 2020’.

  ​Project Finance ​ ​Project-Related Corporate Loans ​
Sector ​Category A ​Category B ​Category A ​Category B
​Power 3 3 0 0
Oil & Gas 0 0 0 0
Infrastructure 0 0 0 0
Other 0 0 0 0
Totals 3 3 0 0
​Region        
Americas 1 3 0 0
​Asia Pacific 1 0 0 0
Europe 1 0 0 0
​​Totals 3 3 0 0
​Country Designation        
​Designated Country 2 3 0 0
​Non-Designated Country 1 0 0 0
Totals 3 3 0 0
​Independent Review Performed        
Yes 3 1 0 0
No 0 2 0 0
Totals 3 3 0 0


 

2022 archive: Equator Principles transactions reaching financial close during 2022

2021 archive: Equator Principles transactions reaching financial close during 2021

2020 archive: Equator Principles transactions reaching financial close during 2020 


 

Date modified: 2024-06-20