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Banks to adopt environmental rules amid opposition
5th June 2003
Planet Ark
NEW YORK - About 10 U.S. and European banks are preparing yesterday to adopt new principles governing how they finance projects, especially in emerging markets, people familiar with the matter said.
The banks - which include Citigroup Inc. (C.N), Holland's ABN Amro Holding NV (AAH.AS), Britain's Barclays Plc (BARC.L) and Germany's WestLB - however, are drawing opposition from an advocacy group that alleges the principles will not stop the banks from funding companies that destroy rain forests.
A news conference is scheduled for Wednesday to announce the banks' adoption of the so-called "Equator Principles" drafted by the International Finance Corp., the private sector arm of the World Bank, the sources said.
According to the agreement, a copy of which was provided to Reuters, the banks agree, "not (to) provide loans directly to projects where the borrower will not or is unable to comply with our environmental and social policies and processes."
The Equator Principles classify projects according to their affect on the environment - including wetlands, forests and other natural habitats - or various ethnic minorities or culturally significant sites. They then set procedures or communications that prospective borrowers must follow.
In the first quarter of 2003, Citigroup, WestLB and Barclays were among the top 20 banks tapped to arrange project finance loans worldwide. Combined, they handled $1.4 billion, or 10.2 percent, of a $13.8 billion loan market, according to Dealogic LLC.
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