Archived press release

UK Banks Must Stop Undermining Green Guidelines

23 January 2004

UK banks are among a number of major international banks threatening to undermine the credibility of the Equator Principles, the banking sector's green guidelines, launched less than a year ago. Friends of the Earth, working as part of the international BankTrack network, accused the banks of lacking transparency and continuing to fund controversial projects [1].

Friends of the Earth called on the UK banks not to back track on their commitments, made in June last year, to ensure that "projects are developed in a socially responsible manner and according to sound environmental management practices."

Since June 2003, 19 leading banks have signed on to the Equator Principles, committing themselves to apply the social and environmental policies of the IFC, the World Bank's private arm, in all their project lending. Many of the UK major banks have signed up as a result of NGOs campaigns exposed the banks links to the financing of the unsustainable logging of Indonesian forests [2].

While cautiously welcomed by NGOs as a first step in a long process leading to socially and environmentally responsible banking practices, the continued support of Equator banks for controversial projects has led to serious doubts about the viability of the Principles.

Barclays bank, a signatory of the Principles, is currently involved in financing the building of a huge hydropower project in the Icelandic highlands which clearly breaches the principles on a number of counts [3]. Another signatory, Standard Charter bank is also involved in arranging finance for a massive Omkareshwar dam in India, which similarly appears to be in breach of the principles.

At least eight banks signed up to the Equator Principles (EP) are participating in the Baku Tbilisi Ceyhan pipeline project, which, according to NGO research, is in total or partial breach of five EP referenced IFC standards on at least 127 counts.

The BankTrack network is calling on the banks to put the principles into practice, and move beyond the limited framework they provide. This would include a commitment to full information disclosure and transparency, setting up a joint `Independent Accountability Mechanism, and moving beyond IFC standards where these are not best practice.

Friends of the Earth Finance Campaigner Simon McRae said:

"For the Equator Principles to work, banks need to be transparent about how they are financing projects and to allow affected stakeholders such as local communities the right to have a say in whether they are being implemented. The continued financing of controversial projects such as Karahnjukar by Barclays can only undermine the credibility of the Equator Principles. The UK banks must take action to make sure these principles operate in practice."

Notes

[1] "No U-Turn allowed; NGO recommendations to the Equator banks" at www.banktrack.org

[2] See www.foe.co.uk/resource/briefings/asia_pulp_and_paper.pdf (PDF†)

[3] See www.foe.co.uk/resource/briefings/barclays_karahnjukar.pdf (PDF†)

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