UKEF's implementation of the Equator Principles (1 April 2021 to 31 March 2022)
Published 31 October 2022
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1. Background
UK Export Finance (UKEF) adopted the Equator Principles (EP) on 31st March 2016, joining what now comprises 137 other banks and Export Credit Agencies (EP Financial Institutions - EPFIs) in applying this global guidance for environmental, social and human rights (ESHR) risk management when financing projects.
During the reporting period 1st April 2021 to 31st March 2022 UKEF actively engaged in an EP initiative to develop good practice terms of references to be used by consultants for conducting both Environmental and Social Due Diligence and Environmental and Social Impact Assessments.
Having necessarily stepped down from its role on the EP Steering Committee in October 2020 due to EP governance rules requirements, UKEF re-applied and was subsequently voted by EPFIs to re-join the EP Steering Committee in a Management Support role from October 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 2021 and 31st March 2022, UKEF has reached financial close on six transactions that fell within the scope of the Equator Principles. These are reported in Table 1 (Project Related Corporate Loans) and Table 2 (Project Finance).
2.1 Table 1
| Financial Product | Category | Sector | Region | EP Country Designation | Has an independent review taken place? |
|---|---|---|---|---|---|
| Project Related Corporate Loan | B | Construction | Europe, Middle East & Africa | Non-Designated (Cameroon) | Yes |
| Project Related Corporate Loan | A | Construction | Europe, Middle East & Africa | Non-Designated (Ghana) | Yes |
| Project Related Corporate Loan | A | Construction | Europe, Middle East & Africa | Non-Designated (Serbia) | Yes |
| Project Related Corporate Loan | A | Power | Europe, Middle East & Africa | Non-Designated (Turkey) | Yes |
| Project Related Corporate Loan | A | Infrastructure | Europe, Middle East & Africa | Non-Designated (Turkey) | Yes |
2.2 Table 2
| Financial Product | Transaction name | Category | Sector | Region | EP Country Designation | Has an independent review taken place? |
|---|---|---|---|---|---|---|
| Project Finance | Changhua Offshore Wind Farm Project | A | Power | Asia Pacific | Non-Designated (Taiwan) | Yes |
UKEF has not reached financial close on any 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 2021/22.
UKEF’s Environmental & Social Risk Management Division (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.
Over the reporting period the E&S Team had an average of approximately 10 full time equivalent staff and reported directly to the Head of Strategy, Policy and Climate Change Directorate 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 and climate change risk management.