The Equator Principles are Citi’s Environmental and Social Risk Management (ESRM) gold standard. New requirements cover project-related corporate loans and bridge loans, as well as strengthened risk management on climate change, human rights and Indigenous Peoples. EP transactions are also now subject to expanded year-end aggregate reporting requirements.
In 2014, Citi applied the expanded requirements of Equator Principles III to all relevant transactions. Compliance with EP is fully integrated into Citi’s credit policy and processes. Implementation is a joint responsibility of their dedicated ESRM unit, bankers, and credit risk managers, with advice from qualified independent consultants as needed. The ESRM unit reviews projects initially in the marketing stage to determine EP category and EP requirements, and during the due diligence phase reviews independent consultant EP reports to assess EP compliance. Bankers manage client relationships, communicating EP requirements to clients and ensuring that required EP covenants are included in loan documentation. Senior credit risk managers are responsible for approving transactions at the credit approval stage, including confirmation that transactions are on track for EP compliance.