¹ Conley, John & Williams, Cynthia, Global Banks as Global Sustainability Regulators?: The Equator Principles 33 Law & Pol'y 1 (2011).Google Scholar

² There are, of course, numerous other ways to label instruments of private governance. For a few relevant examples, see Ong, infra note 50, and Richardson, infra note 51.Google Scholar

³ For a discussion of how this phenomenon has been (and continues to be) characterized—and some of the issues around this—see e.g. Stepan Wood, Green Revolution or Greenwash? Voluntary Standards, Public Law, and Private Authority in Canada, in New Perspectives on the Public-Private Divide 139 (Law Commission of Canada ed., 2003).Google Scholar

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⁵ International Chamber of Commerce, Business Charter for Sustainable Development (1991).Google Scholar

⁶ Clarkson, Stephen & Wood, Stepan, A Perilous Imbalance: The Globalization of Canadian Law and Governance 231 ff. (2010); Aseem Prakash, Responsible Care: An Assessment 39 Bus. and Soc. 183 (2000).Google Scholar

⁷ Wood, , supra note 3; Oren Perez, The New Universe of Green Finance: From Self-Regulation to Multi-Polar Governance, in Responsible Business: Self-Governances and Law in Transnational Economic Transactions 151, 155 (Olaf Dilling, Martin Herberg & Gerd Winter eds., 2008).Google Scholar

⁸ O'Sullivan, Niamh & O'Dwyer, Brendan, Stakeholder Perspectives on a Financial Sector Legitimization Process: The Case of NGOs and the Equator Principles 22 Accounting Auditing & Accountability J. 553, 565 (2009).Google Scholar

⁹ Although NGOs also raised (and continue to raise) concerns over the social impacts of project finance, in this paper I will focus exclusively on the environmental element.Google Scholar

¹⁰ Some details surrounding these NGO concerns are captured in the 2003 Collevecchio Declaration, which was created by a group of NGOs. The Collevecchio Declaration suggests six principles that should be embraced by the financial services sector in their activities. See Collevecchio Declaration, available at: http://www.banktrack.org/download/collevechio_declaration/030401_collevecchio_declaration_with_signatories.pdf (last accessed: 1 December 2012).Google Scholar

¹¹ Principles, Equator, Official First Draft of EP III for Public Consultation, available at: http://www.equator-principles.com/resources/EPIII_PACKAGE.pdf (last accessed: 1 December 2012) [hereinafter “EPs III Draft”].Google Scholar

¹² Cundy, Christopher, Equator Principles Begin Drafting Third Iteration, Environ. Fin. (2011), available at: http://www.environmental-finance.com/news/view/2105 (last accessed: 1 December 2012). See also Equator Principles, Public Release—The Equator Principles (EP III) Draft, available at: http://www.equator-principles.com/index.php/about-ep3 (last accessed: 1 December 2012).Google Scholar

¹³ The Equator Principles, available at: http://www.equator-principles.com/ (last accessed: 1 December 2012) [hereinafter “EPs Website”].Google Scholar

¹⁴ The EPs take their definition of project finance from the Basel Committee on Banking Supervision, International Convergence of Capital Measurement and Capital Standards, which describe it as “a method of funding in which the lender looks primarily to the revenues generated by single project, both as the source of repayment and as security for the exposure. …” see the Equator Principles, Preamble, available at: http://www.equator-principles.com/resources/equator_principles.pdf (last accessed: 1 December 2012) [hereinafter “Equator Principles”]. All references here are made to the current version unless otherwise stated.Google Scholar

¹⁵ EPs Website, supra note 13.Google Scholar

¹⁶ Equator Principles, supra note 14, Scope. The EPs III Draft would widen this scope so as to include project-related corporate loans amounting in aggregate to at least $100 million and bridge loans of less than 2 years that are to be refinanced by a project finance or project-related corporate loan. EPs III Draft, supra note 11.Google Scholar

¹⁷ Principle 2 of the current draft of the EPs III Draft would, in addition, require an evaluation of less GHG-intensive alternatives to projects that are anticipated to emit more than 100,000 tons of CO₂ per year. Certain additional obligations would also be imposed upon EPFI that are providing a Bridge Loan or Project Finance Advisory services. EPs III Draft, supra note 11.Google Scholar

¹⁸ The revised EPs draft allows for some EPFI discretion in determining whether or not an independent assessment is required for project-related corporate loans under certain circumstances. EPs III Draft, supra note 11.Google Scholar

¹⁹ EPs Website, supra note 13. For a more detailed overview see Conley & Williams, supra note 1.Google Scholar

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²¹ Yang, Tseming & Percival, Robert, The Emergence of Global Environmental Law 36 Ecol. L. Qtl'y. 615 (2009).Google Scholar

²² Elena Petkova et. al., Closing the Gap: Information, Participation, and Justice in Decision-making for the Environment 13-15 (2002).Google Scholar

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²⁵ For more details on this evolution—including some of the pre-1992 developments for this principle—see Razzaque, supra note 23.Google Scholar

²⁶ Declaration, Rio, supra note 24.Google Scholar

²⁷ For details see Razzaque, supra note 23, at 286-87.Google Scholar

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³⁰ Id. at Arts. 6-8.Google Scholar

³¹ Id. at Arts. 4-5.Google Scholar

³² Id. at Art 9.Google Scholar

³³ Richardson, Benjamin & Razzaque, Jona, Public Participation in Environmental Decision-making, in Environmental Law for Sustainability 165, at 170-74 (Benjamin J Richardson & Stepan Wood eds., 2006).Google Scholar

³⁴ Craig, Donna & Jeffery, Michael, Non-lawyers and legal regimes: Public participation for ecologically sustainable development, in The Future of International Environmental Law 103, 110 (David Leary & Balakrishna Pisupati eds., 2010).Google Scholar

³⁵ Petkova ET. AL., supra note 22, at 66.Google Scholar

³⁶ Razzaque, , supra note 23, at 284.Google Scholar

³⁷ Statute of the International Court of Justice, appendix to Charter of the United Nations, 26 June 1945, Can TS 1945 No 7 [hereinafter “ICJ”].Google Scholar

³⁸ Id. at Art. 38 (a)-(c).Google Scholar

³⁹ Id. at Art. 38(d).Google Scholar

⁴⁰ For more detail, see Hugh Kindred et. al., International Law Chiefly as Interpreted and Applied in Canada 7^th ed. at ch. 3 (2006).Google Scholar

⁴¹ Thürer, Daniel, Soft Law, in Encyclopaedia of Public International Law 4, 452 (Rudolf Bernhardt ed., 2000).Google Scholar

⁴² David, Ong, From ‘International’ to ‘Transnational’ Environmental Law? A Legal Assessment of the Contribution of the ‘Equator Principles’ to International Environmental Law 79 Nord. J. Int'l. L. 35, 46 (2010), citing Alan Boyle, Some Reflections on the Relationship of Treaties and Soft Law 48 Int'l. & Comp. L.Q. 901, 907 (1999).Google Scholar

⁴³ See Kirton, John & Trebilcock, Michael, Hard Choices and Soft Law in Sustainable Global Governance, in Hard Choices, Soft Law: Voluntary Standards in Global Trade, Environment and Social Governance 3, 11-12 (John Kirton & Michael Trebilcock eds., 2004).Google Scholar

⁴⁴ This phenomenon is illustrated by the history of the principle of transboundary harm. This principle—arguably the most universally recognized customary rule in international environmental law—is generally associated with Principle 21 of the Stockholm Declaration on the Human Environment, which is a non-binding soft law instrument. See Yang & Percival, supra note 21.Google Scholar

⁴⁵ Wesley Cragg Multinational Corporations, Globalisation, and the Challenge of Self-Regulation, in Hard Choices, Soft Law: Voluntary Standards in Global Trade, Environment and Social Governance 213, 213 (John Kirton & Michael Trebilcock eds., 2004).Google Scholar

⁴⁶ See Bas Arts, Math Noortmann & Bob Reinalda, Non-State Actors in International Relations 70-71 (2001). Of course, countless others have made this observation, albeit characterizing it in other ways. See Wood, supra note 3.Google Scholar

⁴⁷ Wood, , supra note 3, at 126. Although he is referring to environmental regulation in a domestic context, his observations can apply equally to the international plane.Google Scholar

⁴⁸ Cragg, , supra note 45, at 213.Google Scholar

⁴⁹ Id. at 221-22.Google Scholar

⁵⁰ Ong, , supra note 42, at 44.Google Scholar

⁵¹ Richardson, Benjamin, Financing Sustainability: The New Transnational Governance of Socially Responsible Investment 17 YRBK. Int'l. Envtl. L. 73, 75 (2008).Google Scholar

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⁵³ Id. at 48.Google Scholar

⁵⁴ Id. at 74.Google Scholar

⁵⁵ Muchlinski, Peter, Human Rights, Social Responsibility and the Regulation of International Business: The Development of International Standards by International Governmental Organisations 3 Non-State Actors and Int'l. L. 123, 129-30 (2003).Google Scholar

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⁵⁷ Id.Google Scholar

⁵⁸ Id. at Principle 4.Google Scholar

⁵⁹ Id. at Principle 4, at n.3.Google Scholar

⁶⁰ Draft Principle 6 is concerned entirely with “stakeholder engagement” and provides some additional detail. A (rather vague) definition of “affected communities” is now provided for in Exhibit I, and the Principle's protections would be extended to “Other Stakeholders” (also defined—also vaguely—in Exhibit I) “where appropriate.” Especial reference is made to indigenous groups, from whom “prior informed consent” would now be required for projects expected to adversely impact them. See EPs III Draft, supra note 11.Google Scholar

⁶¹ Equator Principles, supra note 14, Principle 5.Google Scholar

⁶² Id. at Principle 6.Google Scholar

⁶³ EPs III Draft, supra note 11, Principle 10. See also section C., below.Google Scholar

⁶⁴ Equator Principles, supra note 14, Principle 6.Google Scholar

⁶⁵ The revised Principle 6 modifies slightly substance of this requirement, by providing, for example, that the grievance mechanism “should not impede access to judicial or administrative remedies” and that it “will seek to resolve” concerns presented to it (in contrast to the current formulation, in which borrowers “will. ‥ ensure that the mechanism addresses” concerns). Id.; EPs III Draft, supra note 11, Principle 6.Google Scholar

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⁶⁷ EPs Website, supra note 13. The number of signatories is current as of 25 August 2012.Google Scholar

⁶⁸ EPs Website, supra note 13.Google Scholar

⁶⁹ BankTrack, Project Finance Trends: Key players, regions and sectors 7-8, available at: http://www.banktrack.org/download/project_finance_trends_key_players_regions_and_sectors/0_1_031001_project_finance_trends_key_players_regions_and_sectors.pdf (last accessed: 1 December 2012); EPs Website, supra note 13.Google Scholar

⁷⁰ Richardson, , supra note 51, at 108.Google Scholar

⁷¹ Andrew, Jane, Responsible Financing?: The Equator Principles and Bank Disclosures Accounting & Finance Working Paper 08/01, School of Accounting & Finance, University of Wollongong 6 (2008).Google Scholar

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⁷³ Id. Google Scholar

⁷⁴ Id. at 5.Google Scholar

⁷⁵ Id. at 66.Google Scholar

⁷⁶ As of 25 August 2012, only one Chinese Bank—the Industrial Bank Co.—and no Russian banks have adopted the EPs. See EPs Website, supra note 13.Google Scholar

⁷⁷ Conley, & Williams, , supra note 1.Google Scholar

⁷⁸ Craig, & Jeffrey, , supra note 34, at 116.Google Scholar

⁷⁹ See generally Petkova et. al., supra note 22; Razzaque, supra note 23.Google Scholar

⁸⁰ Razzaque, , supra note 23, at 284.Google Scholar

⁸¹ Petkova et. al., supra note 22, at 35.Google Scholar

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⁸³ Richardson, & Razzaque, , supra note 33, at 182.Google Scholar

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⁸⁵ Id. at ch. 3.Google Scholar

⁸⁶ Id. at 63.Google Scholar

⁸⁷ Convention, Aarhus, supra note 28, Art. 5(6).Google Scholar

⁸⁸ See Black, Julia & Rouch, David, The Development of the Global Markets as Rule-makers: Engagement and Legitimacy L. & Fin. Mkts. Rev. 218 (2008); Steven Berstein & Benjamin Cashore, Non-state Global Governance: Is Forest Certification a Legitimate Alternative to a Global Forest Convention?, in Hard Choices, Soft Law: Voluntary Standards in Global Trade, Environment and Social Governance, 33 (John Kirton & Michael Trebilcock eds., 2004).Google Scholar

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⁹⁰ See BankTrack, Bold Steps Forward: Towards Equator Principles that Deliver to People and the Planet (2010); Andrea Durbin et. al., Shaping the Future of Sustainable Finance: Moving from Paper Promises to Performance 66 ff. (2006); Vivian Lee, Enforcing the Equator Principles: An NGO's Principled Effort to Stop the Financing of a Paper Mill in Uruguay 6 Nw. J. Int'l. Hum. Rts. 254 (2008).Google Scholar

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⁹⁴ As required by Principle 8. See Equator Principles, supra note 14.Google Scholar

⁹⁵ As required by Principle 9. Id. Google Scholar

⁹⁶ Haack, Schoeneborn & Wickert, , supra note 66, at 21.Google Scholar

⁹⁷ For example, “…the EPFI will…categorize…project[s]” [emphasis added] (Principle 1); “… the borrower will .‥ establish a grievance mechanism” [emphasis added] (Principle 6); “…the borrower will covenant in financing documentation” [emphasis added] (Principle 8). See Equator Principles, supra note 14.Google Scholar

⁹⁸ International Institute for Environment and Development, Just Economics, Investing for Sustainable development? 44 (2011), available at: http://pubs.iied.org/pdfs/16505IIED.pdf (last accessed: 1 December 2012) [hereinafter “Just Economics”].Google Scholar

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¹⁰⁰ Deringer, Freshfields Bruckhaus, supra note 92, at 107.Google Scholar

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¹⁰⁵ Lazarus, , supra note 104, at 7.Google Scholar

¹⁰⁶ Id.Google Scholar

¹⁰⁷ Id. at 7.Google Scholar

¹⁰⁸ BankTrack, supra note 90, at 3.Google Scholar

¹⁰⁹ Richardson, , supra note 51, at 93, who points to the Baku-Tbilisi-Ceyhan Pipeline website, which was maintained throughout the project's construction.Google Scholar

¹¹⁰ BankTrack, Principles, Profits or Just PR? Triple P Investments under the Equator Principles 31 (2004). This report points to the Nam Thuen 2 hydropower project in Laos as an example.Google Scholar

¹¹¹ Equator Principles, supra note 14, at Principle 5 [emphasis added].Google Scholar

¹¹² EPs III Draft, supra note 11, at Principle 5 [emphasis added].Google Scholar

¹¹³ The current version of the text provides, in a footnote, that reporting “should” include at minimum the number of transactions screened. Equator Principles, supra note 14, Principle 10, n.6. See also above discussion.Google Scholar

¹¹⁴ EPs III Draft, supra note 11, at Principle 10.Google Scholar

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¹¹⁶ EPs Website, supra note 13.Google Scholar