The Equator Principles are a set of ten guidelines under which the financial institutions that adopt them voluntarily undertake to assess and take into consideration the social and environmental risks associated with the investments they finance within the field of development, in order to ensure the sustainable nature of the operations being financed.


Who has signed up to them?

These Principles were established in 2003 with the support of the International Finance Corporation (IFC) attached to the World Bank. Up to the end of August 2016 they had been adopted by 84 institutions. All of them collaborate in promoting best practices, in order to ensure standards improve, and also prepare an annual report on its application.

What is the commitment?

In accordance with the Equator Principles, CaixaBank goes through different phases when assessing projects:

1. The potential social and environmental risks and impacts of the projects are assessed, which are subsequently classified into three categories: A, B or C, according to the standards of the International Finance Corporation, IFC, attached to the World Bank Group.
   
   A: projects with potential significant adverse environmental and social impacts that are considered irreversible or unprecedented.
   
   B: projects with potential limited adverse environmental and social impacts that are few in number, generally site-specific, largely reversible and readily addressed through mitigation measures.
   
   C: projects with minimum social or environmental impacts or that have no adverse impact, including certain projects carried out by financial intermediaries with minimum risks or without risks.
2. Once classified, an independent expert must confirm that the projects meet the requirements of the Principles. For those projects with a higher foreseeable impact, category A or B, these requirements include a social and environmental assessment and a specific action plan, related to the potential risks and impacts, which must be followed.
3. If the project is economically viable and these risks and impacts are considered acceptable and feasible, the loan is agreed. In the case of category A projects, or category B projects for non-designated countries, the loan conditions require the borrower to contract an independent consultant to monitor the project until start up and to review the project's environmental and social monitoring, control and follow-up reports, in order to guarantee all the Principles are fulfilled.

By adopting these guidelines, CaixaBank undertakes to apply them to all project finance in which it participates and that require an overall financing higher than ten million dollars, regardless of the sector and the place in the world in which they are situated. Similarly, since 1 January 2014 they have been applied to all corporate loans linked to projects with an overall amount that is higher than 100 million dollars in which CaixaBank has a stake of at least 50 million dollars.

In accordance with these Principles, to be approved, projects need to be assessed positively with social and environmental factors incorporated in the analysis, as per certain standards established by the International Finance Corporation (IFC).

More information on the IFC

This is a system to fund projects requiring a very high investment with certain predictable and sustainable expectations of future revenue generation to allow the loan to be repaid. In addition, the assets that have been financed with the loan serve as a repayment guarantee. These characteristics allow the projects to receive a specific financing that is generally provided by several companies. Some examples of these kinds of projects are motorways, telephone networks, etc.

CaixaBank's activity must be coherent with its corporate values, its codes of conduct and general risk principles. Some of the sectors in which CaixaBank operates could have a significant environmental impact. For this reason, in accordance with a rigorous and responsible decision-making process, CaixaBank believes it is essential to identify, assess and manage the environmental risk associated with its activity.

Scope of the management framework

Project finance is carried out under the Equator Principles, which CaixaBank has adhered to since 2007. As a result, an analysis of the potential environmental and social risks and impacts of the projects is required, carried out according to the standards established by the International Finance Corporation (IFC), for:

• Financing projects and project financial advice services with a minimum investment of €7 million.
• Corporate loans linked to investment projects with an overall amount of at least €70 million and in which
• CaixaBank's individual commitment is at least €35 million and the term of the loan is equal to or more than 2 years.
• Bonds linked to projects with an amount equal to or more than €7 million.
• Bridging loans with a term of less than 2 years that are to be refinanced through project financing or a corporate loan linked to a project, meeting the previously indicated criteria in each case.
• Since 2011 CaixaBank has voluntarily applied the above-mentioned procedure to syndicated operations, with a term greater than or equal to 3 years and when CaixaBank's individual commitment is between €7 million and €35 million. Additionally, since 2015 the procedure has been applied to other operations to finance investment projects with a minimum term of 3 years and a minimum amount of €5 million when the holder is a medium/large, large or very large entity.

Application by CaixaBank

• Rejects any project entailing potentially significant and irreversible risks or impacts for which no viable action plan can be established, or which conflicts with corporate values.
• In other instances, an independent expert is appointed to evaluate each borrower's social and environmental management plan and system. The projects are classified into categories A, B and C depending on the potential risks and impacts detected during the due diligence process, which involves teams from the sales and risk areas and external experts.
• Category A and certain Category B projects may have potentially significant adverse impacts. In these cases, an action plan must be drawn up to help prevent, minimise, mitigate and remedy the adverse social and environmental impacts.

Number of financed projects in 2018

1. The reflected amounts can vary because of the change of conditions in the loans granted in closed dates to the reporting.

In 2018, eight projects were assessed in accordance with the Equator Principles entailing total investment of € 10,626 million, of which CaixaBank contributed more than € 603 million. One project was classified under category A and seven were classified under category B.

Global volume by sector and category (in euros)

Note: data updated as of May 2019

In 2017, seven projects were assessed in accordance with the Equator Principles entailing total investment of € 2,793 million, of which CaixaBank contributed more than € 332 million. None was classified under category A, five were classified under category B and one under category C.

Projects evaluated according to Ecuador Principles classified as B:

HENVEY - GROUP PATTERN ENERGY

BEATRICE

MAINSTREAM

Number of financed projects in 2017

Global volume by sector and category ( in euros)

Note: as of December 2017. Figures for 2017 were updated down the line due to the delays in collecting the contractual documents relating to the transactions.

In 2016, twelve projects were assessed in accordance with the Equator Principles entailing total investment of € 4,800 million, of which CaixaBank contributed more than € 721 million. None was classified under category A, ten were classified under category B and the remaining two under category C.

Number of financed projects in 2016

Global volume by sector and category

Note: as of April 2017

In 2015, fourteen projects were assessed in accordance with the Equator Principles entailing total investment of € 17,808 million, of which CaixaBank contributed more than € 636 million. None was classified under category A, twelve were classified under category B and the remaining two under category C.

Number of financed projects in 2015

Global volume by sector and category

Note: as of March 2016.

In 2014, nine projects were assessed in accordance with the Equator Principles entailing total investment of € 2,506 million, of which CaixaBank contributed more than € 270 million. One was classified under category A, four under category B and the remaining four under category C.

Number of financed projects in 2014

Global volume by sector and category (in thousand euros)

Note: as of February 24th 2016.