What's New in EP III - Greenhouse Gases Alternatives Analysis and Reporting

What's New in EP III - Increased Scope of Labour and Working Conditions Requirements

What's New in EP III - Public Disclosure of Environmental and Social Impact Assessment (ESIA) and Environmental and Social Management Plans (ESMP)

What stays (essentially) the same in EP III?

The following items remain the same in EP III according to the draft that was released in August 2012.  The final draft will be released in early 2013. So, what will likely stay the same?  Read more to find out...

Increasing Role for Legal Professional Privilege in EP Process

In light of the inter-relationship and overlap between EP and legal and regulatory requirements, an integrated approach to EP implementation with environmental and social legal due diligence is likely to emerge as a best practice trend. One significant advantage of doing so is the potential role that legal privilege can play in the EP implementation process.

New UN Global Compact Business Reference Guide on Indigenous Peoples' Rights Released

Following on revision of the IFC Perofrmance Standard 7 on Indigenous Peoples.  The UN Global Compact guide can be found HERE.

Expanded Scope of the Proposed Equator Principles III

Growing Legal Implications for Banks as Private Regulators of Environmental and Social Standards – Need for a New Approach with More Legal Involvement

Many banks have historically treated Equator Principles (EP) implementation process as though it were “non-legal”. This has been due, in part, to a belief that the initially voluntary nature of the EP agreement makes it different from a legally imposed requirement. While entering into the EP agreement is, certainly, a voluntary decision, the reality of that decision is that it carries significant legal implications and even risks.

Sustainable Finance 2.0 – Application to Capital Markets

Specialist “Equator Principles Bank” Role in Project Finance?

NYT: China Mandates "Social Risk" Assessments for Big Projects

“No major projects can be launched without social risk evaluations,” Zhou Shengxian, the environment minister, said at the news conference. “By doing so, I hope we can reduce the number of mass incidents in the future.” Read full article here.

IFC Performance Standards on Environmental & Social Sustainability: A Global Benchmark for CSR with Legal Implications for International Trade and Finance

In May 2009, the Government of Canada established the Office of the Extractive Sector Corporate Social Responsibility Counsellor (“CSR Counsellor”) and explicitly endorsed the International Finance Corporation (IFC) Performance Standards on Environmental & Social Sustainability (IFC Performance Standards) as a primary part of the Corporate Social Responsibility (CSR) expectations for the Canadian mining and oil & gas industries. This endorsement was but the latest development to highlight the increasingly important role the IFC Performance Standards play in setting the standard for CSR and sustainable development in foreign direct investment. In considering the concept of CSR from a legal perspective, it gives rise to questions about the legal implications of the use of this environmental and social risk management standard in international trade, particularly as it may come to be used in investment disputes and to impose liability on lenders and borrowers.

CSR and Litigation Strategies - Comments on Forbes' CSR Blog Article "Shell, Corporate Social Responsibility and Respect for the Law"

Forbes' CSR blog posted an interesting article by Amol Mehra and Katie Shay on Shell's litigation strategy in relation to litigation under the United States Alien Tort Statute (ATS).  In the article, the authors criticize Shell's arguments to the US Supreme Court that the ATS should not apply so as to bring the allegations (which relate to activities in Nigeria) within the jurisdiction of a US Court.  While I respect their views and think it is an important question to consider, I strongly disagree with their conclusions...

The Meaning of "Prior" in Free, Prior and Informed Consent of Indigenous Peoples

The new Performance Standard 7 of the IFC Performance Standards for Environmental and Social Sustainability, used in environmental and social risk management by Financial Institutions through the Equator Principles Framework, requires the application of the "Free, Prior and Informed Consent" concept to certain projects affecting Indigenous Peoples.  In the book IFC Performance Standards for Environmental and Social Sustainability: A Guidebook, lawyer Pierre Christian Labeau discusses the meaning of "prior" in the context of FPIC.

IFC performance standards: A benchmark for CSR | Canadian Mining Journal

IFC performance standards: A benchmark for CSR | Canadian Mining Journal

Is Employer Neutrality Required by the IFC Performance Standards? Probably Not But Be Careful...

Performance Standard 2 of the IFC Performance Standards for Environmental & Social Sustainability (Performance Standards) requires that workers not be discouraged from joining or forming a workers’ organization. Discrimination, retaliation, refusal to hire, demotion, reassignment, outsourcing, shifting work, or other retaliation in response to union activities is prohibited by PS 2. Does it also require neutrality of the employer in regard to unionization?  Probably not, but FIs and clients applying the Performance Standards should be careful when taking a position regarding organizing efforts of workers.

Corporate Crimes for Employee Conduct - Bribery & Anti-Corruption

The Canadian Corruption of Foreign Public Officials Act (“CFPOA”) and the Criminal Code of Canada (the "Code") makes it an indictable offence for an individual or organization to (i) directly or indirectly (ii) offer or give or agree to offer or give (iii) an advantage or benefit (iv) in order to obtain or retain an advantage in the course of business (v) to a foreign public official or to any person for the benefit of the foreign public official (vi) either as consideration for, or to induce an act or omission by the foreign public official. In applying these provisions, corporate criminal liability may attach to an organization through the acts and intentions of its senior officers acting within the scope of their authority. In other words, the acts of such employees may create legal liability for the corporation itself.

Ability to Pay in OHS Sentencing - Australian and Canadian Analogies

The Work Health and Safety Act, 2011 (the “WHSA”) in New South Wales (NSW) provides that a breach of the WHSA is a criminal offence attracting a maximum penalty of $600,000 and up to five years imprisonment for serious offences by corporate officers. There are a variety of considerations that a Court will make in determining the appropriate penalties where a breach of the WHSA has been found. Among these is the ability to pay of the Defendant pursuant to section 6 of the Fines Act – a sentencing provision which was recently applied in the case of Inspector Hall v Raydaz Design Pty Ltd to reduce the amount of a fine under the WHSA. Recent Canadian case law involving the imposition of fines for workplace health and safety violations may offer some useful analogies for application of section 6 of the Fines Act to sentencing under the WHSA.

Draft of Updated Equator Principles (EP III) Released for Stakeholder Consultation and Public Comment

The Equator Principles (EP) Association today releases the draft of the updated Equator Principles (EP III) for stakeholder consultation and public comment.

The EP is a risk framework for identifying, assessing, and managing environmental and social risks in Project Finance transactions and has been adopted by 77 financial institutions worldwide. Key themes and areas of development proposed in the EP III draft include:

• An extension in the scope of the EP to Project-Related Corporate Loans and Bridge Loans.
• Changes reflecting the recent update of the International Finance Corporation (IFC) Performance Standards.
• New requirements related to managing impacts on climate.
• Greater emphasis on human rights considerations in due diligence and an acknowledgment of the UN "Protect, Respect and Remedy" Framework for Business and Human Rights and Guiding Principles on Business and Human Rights.
• A strengthening of reporting and transparency requirements.

The draft can be found HERE.

NEW BOOK: IFC Performance Standards on Environmental & Social Sustainability: A Guidebook

This Guidebook provides a comprehensive analysis of the IFC Performance Standards on Environmental and Social Sustainability (IFC Standards), as used in financial investment decision making and international business operations.

IFC Performance Standards as a Benchmark for CSR and Sustainability

When defining what CSR means, mining and energy companies operating in emerging markets should first look to the contents of the IFC Performance Standards.

There are other frameworks, private or public, legal or best practice in nature, which may be important in defining the full extent of corporate expectations, but there is little doubt that the IFC Performance Standards are emerging as the de facto benchmark for CSR and sustainable business practices.

Sustainability in International Project Finance

Michael Torrance and Pierre Dagenais of Norton Rose Group discuss the international project finance landscape, corporate social responsibility issues and the equator principles.