Applying Equator Principles
The Equator Principles is a risk management framework, adopted by international financial institutions, for determining, assessing and managing environmental and social risk in projects. SEB adopted Equator Principles in 2007. During this period, well proven routines and internal guidelines have been established within SEB, routines that are closely monitored by various stakeholders within the bank. SEB is constantly striving to improve the implementation and awareness of the Equator Principles framework.
- When a new potential transaction is recognised, an Equator Principles Reviewing Team ("EPRT") is formed in order to identify whether the transaction falls within the scope of the Equator Principles framework. The team consists of the respective Client Executive, a dedicated person responsible for Equator Principles monitoring from the business side and an advisor from SEB’s central sustainability team, Sustainable Banking. The team assesses the potential transaction in a structured and organized manner and requests additional expertise if needed..
- The screening and categorization (A, B or C) of transactions is carried out by the EPRT. If the EPRT and Sustainable Banking cannot agree on a category, the decision would be escalated to applicable business committee. In practice, such situations are exceptional.
- All transactions that qualify within the Equator Principles scope needs to be presented in a business/credit committee before potential approval. Applications contain a specific section dedicated to Equator Principles, where it is required to specify whether a transaction falls within the framework or not. The validation and approval process is performed by i) appropriate Business Committee and ii) Group Credits. This follows the normal process for all types of transactions. Social and environmental aspects are important parts of the overall approval process.
- After credit approval, covenants are finalised by the transaction team with applicable expertise and advice from Legal Department as well as Sustainable Banking. In this way, processes and routines are in place to ensure that Equator Principles related covenants are correctly implemented and adhered to.
- A client's continuing compliance with applicable standards and Equator Principles requirements is monitored by the transaction team with the expertise advice from Sustainable Banking if necessary. The policies and processes implemented around Equator Principles are integrated in the general environmental and social risk framework within the bank. The monitoring and reporting requirements are recognized on SEB Group level.