Equator Principles

Equator Principles LogoTaking into account the values and mission which underpin ICO, in October 2016, it adhered to the Equator Principles with the aim of improving its risk management system on large financing projects through identifying and mitigating any potential negative impacts which these projects could cause on the environment, on people, and on the climate.

ICO's public nature and mission require it to promote and encourage best management practices which contribute to a sustainable business fabric in line with the SDGs and the fight against climate change. By adhering to these Principles, ICO positions itself amongst the leading banks in the drive towards sustainable and responsible financing.

Scope

For ICO, risk analysis which includes and considers the indirect impacts of the financing projects does not respond solely to the fiduciary duty conferred by its public nature and its vocation as a Development Entity, but also to the demands of all its stakeholders.

Under this premise, ICO will rigorously analyse all social and environmental risks of operations falling under the "scope" of the Equator Principles, and which will be applied to new financing projects in all countries and all economic sectors.

1. Project Finance Advisory Services where total Project capital costs are US$10 million or more.

2. Project Finance with total Project capital costs of US$10 million or more.

3. Project-Related Corporate Loans* (including Export Finance in the form of Buyer Credit) where all four of the following criteria are met:

i. The majority of the loan is related to a single Project over which the client has Effective Operational Control (either direct or indirect).

ii. The total aggregate loan amount is at least US$100 million.

iii. The EPFI's individual commitment (before syndication or sell down) is at least US$50 million.

iv. The loan tenor is at least two years.

4. Bridge Loans with a tenor of less than two years that are intended to be refinanced by Project Finance or a Project-Related Corporate Loan that is anticipated to meet the relevant criteria described above.

While the Equator Principles are not intended to be applied retroactively, the EPFI will apply them to the expansion or upgrade of an existing Project where changes in scale or scope may create significant environmental and social risks and impacts, or significantly change the nature or degree of an existing impact.

*Project-Related Corporate Loans exclude Export Finance in the form of Supplier Credit (as the client has no Effective Operational Control). Furthermore, Project-Related Corporate Loans exclude other financial instruments that do not finance an underlying Project, such as Asset Finance, acquisition finance, hedging, leasing, letters of credit, general corporate purposes loans, and general working capital expenditures loans used to maintain a company's operations.

 

Integration of the Equator Principles into ICO's Operational Procedures

We implemented the Equator Principles in 2017, including new obligations in our regular operations approval and management processes.

functional diagram

Transversally, the areas and departments taking part in ICO's direct financing have assumed part of the Equator Principles guidelines integrating them into its financing processes:

diagram of areas and departmentsTRAINING

To achieve this, the internal training process has been developed in two phases; the first part from HR and CSR with the aim of raising awareness about the importance of appropriately managing the social and environmental risks. The second phase, as part of the training plan on our adherence to the Equator Principles and the necessary training of the different working teams and areas:

1st Phase: Awareness and training for all ICO staff focused on explaining ICO's commitment to sustainable development due to its public nature and the need to ensure that the projects we finance are executed in a sustainable, appropriate manner and in accordance with standards and norms recognised by the international financial community.

2nd Phase: Training teams involved in credit analysis, on the specific analysis of environmental and social risks and on Equator Principles standard requirements.

These specific training will continue to be available in ICO's training plan for 2018 and subsequent years, for all employees involved in controlling the environmental and social impact of ICO's activity and it's associated risks.

Commitment and compliance to Equator Principles

ICO has successfully completed the implementation process and now relies on a new standard to help it pursue the SDGs and contribute to a low carbon economy which slows down climate change.

Through its CSR Policy, ICO seeks to ensure that all its activity transversally generates the trust and transparency demanded of its stakeholders and, therefore, through the Equator Principles, ICO establishes more stringent due diligence procedures for its financing and credit risk analysis procedures.

ICO adopts these Principles voluntarily, which complement its mission and through which it is obliged to classify and establish management plans to mitigate the social, environmental or climate change impact of the large investment projects in which it plays a part.

In this regard, ICO undertakes to publicly disclose all the projects financed which fall under the "scope" of the Equator Principles annually, and following the reporting guidelines indicated in the Principles themselves.