UKEF's implementation of the Equator Principles (1 April 2019 to 31 March 2020)
Published 26 August 2020
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1. Background: Equator Principles
UK Export Finance (UKEF) adopted the Equator Principles (EPs) on 31 March 2016, joining what now comprises over 100 other banks and Export Credit Agencies in applying this global guidance for environmental, social and human rights (ESHR) risk management when financing projects.
In July 2018, UKEF was re-elected by the Equator Principles Financial Institutions (EPFIs) to remain on the EP Steering Committee in a management support role for a second 2-year term which UKEF has continued throughout this reporting period. Additionally, over the reporting period UKEF has also led and contributed to various working groups tasked with considering updates to the EPs which have more recently concluded with the update to EP4.
UKEF continues to follow the OECD Recommendation on Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (OECD Common Approaches), currently dated 7 April 2016, which it applies alongside the EPs as outlined in its Policy and Practice on Environmental, Social and Human Rights due diligence and monitoring (ESHR Policy).
This reporting of our implementation of the EPs for the period 1 April 2019 to 31 March 2020 forms part of UKEF’s obligations under Equator Principle 10 (Reporting and Transparency) and as articulated in Annex B of the EPs.
2. Projects supported within the scope of the Equator Principles
Between 1 April 2019 and 31 March 2020, UKEF has reached financial close on four transactions that fell within the scope of the Equator Principles. These are reported below.
2.1 Project-related corporate loans
| Category | Sector | Region | EP country designation | Has an independent review taken place? |
|---|---|---|---|---|
| B | Construction | Europe, Middle East and Africa | Non-designated (UAE) | No |
2.2 Project Finance
| Transaction name | Category | Sector | Region | EP country designation | Has an independent review taken place? |
|---|---|---|---|---|---|
| BAPCO refinery | A | Oil and Gas | Europe, Middle East and Africa | Non-designated (Bahrain) | Yes |
| Formosa 2 offshore wind farm | A | Power (Renewables) | Asia Pacific | Non-designated (Taiwan) | Yes |
| Changfang and Xiado offshore wind farm | A | Power (Renewables) | Asia Pacific | Non-designated (Taiwan) | Yes |
3. Implementation of the Equator Principles
UKEF’s ESHR Policy sets out how UKEF implements the Equator Principles alongside the OECD Common Approaches during pre-issue stages (scoping, screening, and due diligence review), which satisfies Equator Principles 1 to 8, and for post-issue monitoring, to satisfy Equator Principle 9. UKEF published a Note of Human Rights and Social Risks and Impacts in support of its ESHR Policy in March 2017. Further information can also be found in UKEF’s Annual Report and Accounts 2019 to 2020.
UKEF’s Environmental & Social Risk Management Team (E&S Team), is responsible for carrying out the implementation of UKEF’s ESHR Policy. The E&S Team’s staff are professionally qualified and directly undertake and/or manage the necessary ESHR due diligence and liaise with project sponsors and/or exporters and UKEF decision-makers. The E&S Team has approximately 8 full time equivalent staff and reports directly to the Head of Business Group and the Chief Executive. The E&S Team continues to provide internal training to UKEF’s Business Group (including underwriters), and wider staff, to raise awareness of the requirements of the OECD Common Approaches, the EPs, and general ESHR risk management.