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The Equator Principles are a common framework used by banks to ensure that the projects they finance, particularly in emerging markets, are implemented in a socially responsible manner and reflect sound environmental practice. Fortis adopted the Equator Principles in 2006 and we established a dedicated Environmental and Social Unit (ESU) to ensure that our commitments are respected.
Our credit policy requires all new project finance transactions to be screened for compliance with the Equator Principles. We’ve also moved beyond project finance by incorporating the spirit of the Equator Principles into other important areas of our business. Our Environmental and Social Unit has been consulted with increasing frequency by, for example, business units involved with corporate lending and trade finance for commodities. This work will carry on in the future, as we continue to pursue our goal of joining the leading rank of sustainability-minded financial institutions.
Our annual CSR Report includes an overview of our performance in applying the Equator Principles in the past year, together with several case studies. To learn more about the Equator Principles, visit www.equator-principles.com.
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Case
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Commodity finance for a fisheries company
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Fortis was approached by a fisheries company that has rapidly expanded in recent years. During this period of expansion, the company acquired a poor reputation for its environmental and social track record. There were also broader concerns over the sustainability of catch levels in the main fisheries where it was sourcing and procuring fish.
The client company explained that it had taken steps to improve its environmental performance. Rather than decline the transaction on environmental and social grounds, the ESU undertook background checks, enquiries and research, finding some evidence to support company claims, but also some continued grounds for concern. A series of recommendations were therefore communicated to the company as part of the loan agreement, structured around three key areas of concern: i). The need for a sustainable procurement policy; ii). Standards for the operation of fishing vessels; iii). Support for wider efforts at improving management in fisheries where the client is active.
These recommendations help address key risks in the transaction, will reinforce the client’s own efforts to bring about improvement in its operations, and will provide the basis for future dialogue and interaction with the client on sustainability issues.
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Case
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Finance for a mine rehabilitation project
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When Fortis takes a leading role in a transaction, we have a greater responsibility for ensuring that environmental and social issues are correctly addressed. That’s because we get involved in the project at an earlier stage than other banks, and we have closer contact with the project sponsors. In the case of a mine rehabilitation project assessed during the course of 2007 Fortis environmental experts worked with the account manager, a public development bank and specialised consultants to perform environmental and social due diligence on-site. This identified a number of risks that were not adequately addressed by existing management systems, and corrective action plans were agreed with the sponsor.
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