The bank's commitment to the Equator Principles means that the financing of large-scale projects as well as many projects originating from SME business must now be subjected to additional scrutiny. Since the 2013 reporting year, we have published details in our Sustainability Report of how we apply the Equator Principles in real-world situations.

The ten Equator Principles

  • Principle 1: Review and categorization
    The potential risks of the project in question must be assigned by the participating financial institution to Risk Category A (significant adverse social and environmental risks/impacts), B (moderate adverse social and environmental risks/impacts), or C (minimal adverse social and environmental risks/impacts) using the selection criteria of the International Finance Corporation (IFC).
  • Principle 2: Social and environmental impact assessment
    A social and environmental impact assessment (SEIA) is required for all Category A and Category B projects.
  • Principle 3: Applicable social and environmental standards
    Projects outside high-income OECD countries shall be assessed in accordance with the IFC Performance Standards and the industry-specific World Bank Group Environmental, Health and Safety Guidelines.
  • Principle 4: Environmental management plan
    The borrower must draw up an environmental management plan for projects with an ecological impact and describe in detail how the risks identified will be managed.
  • Principle 5: Consultation and disclosure
    The borrower must demonstrate that those affected, including indigenous groups and local non-governmental organizations, have been appropriately consulted.
    Principle 6: Grievance mechanism
    A grievance mechanism scaled to the risks and impacts of the project must be set up as part of the management system.
  • Principle 7: Independent review
    The SEIA, environmental management plan, and documents relating to the consultation process must be reviewed by an independent expert.
  • Principle 8: Covenants
    The borrower must additionally undertake within the loan agreement to comply with all sanctions and requirements relevant to the Equator Principles.
  • Principle 9: Independent monitoring and reporting
    For the duration of the loan, an independent expert must be appointed to report regularly to the lending bank.
  • Principle 10: Reporting by the participating financial institutions
    Each financial institution that signs up to the Equator Principles must prepare at least one public report every year on issues relevant to the Equator Principles and on its experiences and implementation processes in applying the Equator Principles.

Categorization in the lending process

As a signatory to the Equator Principles, DZ BANK is obliged to check projects with a total lending volume of more than US$ 10 million. The check assesses social and environmental relevance and classifies social and environmental impact as 'high', 'moderate' or 'low' risk. This classification takes place as part of the standard lending process. DZ BANK introduced appropriate provisions in the loan agreements for the affected financing as part of its implementation of the Equator Principles.

The experts from DZ BANK use a specially developed analytical process to allocate each project to category A, B, or C, depending on the level of the possible environmental and social risks. This categorization provides an approximate value that is verified in a subsequent qualitative assessment. The overarching aim of the categorization is to evaluate the possible environmental and social risks associated with planning, setting up, and running a project. The categories are based on the environmental and social performance standards set by the International Finance Corporation (IFC) and the World Bank's environmental, health, and safety guidelines. In 2016, seven projects to be financed were allocated to category B and 27 to category C, most of which were projects in the European energy sector. No projects to be financed were classified as category A.

External Standards

The Equator Principles cover the following areas: Working conditions, resource efficiency and prevention of pollution, community health and safety, land acquisition and involuntary resettlement, biodiversity conservation and sustainable management of resources, and protection of indigenous peoples and cultural heritage. The outcome of the qualitative analysis of these areas is documented and examined before the start of the project. The categorization determines the scope of the external checks and the monitoring and reporting mechanisms used for a project.