NGOs want Equator Principles from ADB

Emerging Markets, ADB Annual Meeting, Madrid 2008

NGO groups are calling for changes to the ADB’s Safeguard Policy Update to bring it more closely into line with the Equator Principles – the environmental and policy guidelines devised by the International Finance Corporation and signed to by many of the world’s leading banks.

The SPU aims to improve the effectiveness of the ADB’s safeguard policies, and by April 22 had gone through 13 rounds of consultation workshops worldwide since the consultation draft was first published in October.  But some feel they fall short of the Equator Principle standards – and feel that at a time the ADB is greatly boosting the importance of private sector participation, they ought to move closer to them.

“In the October draft the ADB say that they want to harmonise with the Equator Principles,” said Mishka Zaman, manager of the Asia program at Bank Information Center, a Washington DC-based NGO. “As an objective they aspire to that, but the draft does not match up to it. The actual language will not help them get there.”

Joanna Levitt, Co-Director of the International Accountability Project based in San Francisco, identifies a number of key differences between the two models. “The Equator Principles begin with a clear statement: no play, no pay,” she says, referring to the EP statement that signatory financial institutions will not provide loans to projects where the borrower does not comply with social and environmental policies and procedures. The SPU draft, she says, “has no such clear statement.”

She adds: “EPs, across the board, have clearer, more explicit language, benchmarks and requirements, including on consultation, disclosure, grievance mechanisms, and reporting requirements.” She believes the SPU draft is vague by comparison.

Other examples are that SPU does not require categorization for involuntary resettlement projects based on the level of risks and adverse impacts of projects, and “uses language that leaves a dangerous amount to the discretion of the borrower.” She says that SPU does not require independent monitoring; does not make clear that borrowers have any heightened assessment responsibilities for higher impact projects; and has subtle but important differences of definition regarding negotiated settlements and the avoidance of involuntary settlement.

That said, these comments refer to a draft that will be revised to reflect “the feedback and advice received through the extensive consultations,” according to the ADB; a revised document will be posted on the bank’s website for further comment. It will be clear then whether NGO concerns have been addressed.

Even then, the principles will not please everybody. “We feel that as a starting point, the ADB should use the equator principles for its private sector operations,” says Zaman. “But even with them, I am sure there are things that can be improved. We would like them to offer the Equator Principles as a base for discussion and we can move upwards from there.”