Four major U.S. banks have recently withdrawn from the Equator Principles, a crucial industry benchmark for assessing environmental and social risks in project-related finance, as reported by Reuters on March 5. Established by the banking sector in 2003, these principles aid firms in identifying and managing potential adverse impacts stemming from large infrastructure and industrial projects. While JPMorgan [JPM:US], Citi [C:US], Bank of America [BAC:US], and Wells Fargo [WFC:US] confirmed their departure, they assured that they would still consider the principles in their operations. Despite their exit, the banks underscored their ongoing commitment to evaluating environmental and social risks in project financing. This decision reflects a broader trend of financial institutions stepping back from environmental initiatives.

The banks attributed their withdrawal to internal restructuring and increased investment in environmental and social risk expertise. While affirming their autonomy in decision-making, they maintained that the principles would continue to inform their risk management policies. However, critics, such as Richard Brooks from Stand.Earth, criticized the move as a retreat from established standards. This departure marks a notable shift in the industry landscape, signaling potential implications for future environmental and social risk assessment practices within the banking sector.

Sources:

https://www.reuters.com/business/finance/jpmorgan-citi-wells-boa-are-no-longer-signatories-equator-principles-website-2024-03-05/