![Global rules on foreign direct investment](https://www.nortonrosefulbright.com/-/media/images/nrf/nrfweb/knowledge/publications/us_24355_legal-update--fdi-alert.jpeg?w=265&revision=a5124a65-abf9-40e4-8e96-9df39ffdb212&revision=5250068427347387904&hash=96B456347C3246E5649838DF281C5F5D)
Publication
Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
Canada | Publication | junho 2019
The Equator Principles Association released a draft of the proposed 4th version of the Equator Principles (EP4) on June 24, 2019. View the draft.
Norton Rose Fulbright conducted a legal review of the draft.
The following alert provides an overview of the major changes proposed in EP4.1
The Equator Principles (EPs) are a risk management framework for financial institutions to identify, assess and manage environmental and social risks when financing projects. The EPs apply globally to all industry sectors and defined financial products.
The Equator Principles Association reviews and updates the EPs from time to time in order to reflect ongoing learningand emerging good practice.
The following amendments are being proposed by the Equator Principles Association:
The EPs apply to certain financial products above specified value thresholds.
EP4 propose to decrease the threshold for in-scope Project-Related Corporate Loans to US$50 million. That amount represents the aggregate of any EPFI’s loan amount and its individual commitment (before syndication or sell down). There has also been an addition to the scope of applicability of the EPs in the form of Project-Related Refinancing and Project-Related Acquisition Financing provided the following criteria are met:
In the current version of the EPs, there is an exception for Project-Related Corporate Loans for sovereign borrowers for certain projects. This exception will be removed from the 4th version for all Category A and, as appropriate, Category B Projects.
Principle 3 of the EPs includes a list of ‘designated countries’ which are high income OECD countries where compliance of a Project with local host country laws will be sufficient. The new version clarifies that EPFIs will beevaluating the specific risks of each Project to determine whether any IFC Performance Standards could be used as guidance to address those risks.
The EPFIs will also need to include a review of how any specific Project meets each of the Equator Principles in any Category A and Category B Projects due diligence.
Human rights
The preamble of the draft EP4 stipulates that financial institutions will fulfil their responsibility to respect human rights consistent with the UN Guiding Principles on Business and Human Rights. Principle 2 of EP4, (Environmental and Social Assessment), strengthens the language on human rights, and states that an assessment of adverse human rights impacts should be included in any environmental and social impact assessment.
Two text options are presented in relation to the concept of Free, Prior and Informed Consent for stakeholder consideration and feedback.Option 1 outlines the need to engage in a meaningful consultation with affected Indigenous Peoples with a goal to achieve their Free Prior and Informed Consent. Further action is considered where consent has not been achieved at the time of EPFI's due dilligence. Option 2 requires a demonstration by the client to the EPFI’s satisfaction that the Free, prior and Informed Consent is obtained.
The role of the EPFIs with respect to the 2015 Paris Climate Change Agreement is recognised. This includes the need for availability of climate-related information in line with the recommendations of the Task Force on Climate-related Financial Disclosures.
Principle 2 of EP4 introduces a climate change assessment as part of ESIA or other Assessment:
Principle 10 of EP4 introduces the requirement of public reporting on an annual basis on GHG emission levels.
An initial round of consultation with key stakeholders was undertaken in 2018. The results of those consultations can be found on the Equator Principles website or by clicking here.
A second round of external consultation will take place in July and August 2019.
Publication
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
Publication
Artificial intelligence (AI) raises many intellectual property (IP) issues.
Publication
We are delighted to announce that Al Hounsell, Director of Strategic Innovation & Legal Design based in our Toronto office, has been named 'Innovative Leader of the Year' at the International Legal Technology Association (ILTA) Awards.
Subscribe and stay up to date with the latest legal news, information and events . . .
© Norton Rose Fulbright LLP 2023