UKEF's implementation of the Equator Principles (1 April 2020 to 31 March 2021)
Published 16 July 2021
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1. Background
UK Export Finance (UKEF) adopted the Equator Principles (EPs) on 31st March 2016, joining what now comprises almost 120 other banks and Export Credit Agencies in applying this global guidance for environmental, social and human rights (ESHR) risk management when financing projects.
During the reporting period 1st April 2020 to 31st March 2021 UKEF continued its contribution to the EP Steering Committee in a Management Support role, leading the EP4 Scope Working Group, and attending meetings for Climate Change and Social Risk working groups. EP4 was voluntarily implemented by UKEF on 1 July 2020, ahead of the mandatory deadline of October 2020.
Having served 2 consecutive terms (3 years) on the Steering Committee the EP Governance Rules required UKEF to step down from its role on EP Steering Committee in October 2020. The handover to EDC Canada was finalised in May 2021.
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 7th 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 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 1st April 2020 and 31st March 2021, UKEF has reached financial close on one transaction that fell within the scope of the Equator Principles. This is reported in Table 1 (Project Finance).
2.1 Table 1
| Financial product | Transaction name | Category | Sector | Region | EP country designation | Has an independent review taken place? |
|---|---|---|---|---|---|---|
| Project finance | Mozambique LNG project | A | Oil and gas | Europe, Middle East and Africa | Non-designated (Mozambique) | Yes |
UKEF has not reached financial close on any Project-Related Corporate Loans, Project Finance Advisory Services or commenced support for Bridge Loans that fall under the Equator Principles during the reporting period.
3. Implementation of the Equator Principles
UKEF’s ESHR Policy sets out how UKEF implements the EPs alongside the OECD Common Approaches during pre-issue stages (scoping, screening, and due diligence review), which satisfies EPs 1 – 8, and for post-issue monitoring, to satisfy EP 9. UKEF published a Note of Human Rights and Social Risks and Impacts in support of its ESHR Policy in March 2017 and subsequently updated it upon the implementation of EP4 in July 2020.
UKEF further updated our ESHR Policy in November 2020 to reflect updates regarding consideration of climate change and post-issue public reporting of cases classified as Category B. Further information can also be found in UKEF’s Annual Report and Accounts 2020 to 2021.
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 9 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.