Enforcing the Equator Principles: An NGO’s Principled Effort to Stop the Financing of a Paper Pulp Mill in Uruguay

Lee, Vivian | January 1, 2008

This note will focus on the efforts of an Argentine NGO, the Center for Human Rights and Environment, to use the Equator Principles to stop the financing and construction of a paper-pulp mill, Orion, by the Finnish company Metsa-Botnia in neighboring Uruguay. The Equator Principles, a set of voluntary commitments first adopted in 2003 by private financial institutions, reflect a commitment to, and increasing preoccupation with, responsible lending practices, with particular regard to social and environmental issues. As the Principles were conceived as a set of voluntary guidelines, they do not establish a mechanism for self-enforcement. Nevertheless, the voluntary principles did play an important role allowing the NGO to shame and expose the EPFI to public scrutiny. They also gave CEDHA the opportunity to challenge the project’s compliance with IFC Safeguards through a formal complaint with the Compliance Advisory Ombudsman, the independent recourse mechanism for the IFC. In spite of these efforts, the Orion project was completed and is operational. The Principles nevertheless remain a stepping-stone to a future mechanism of more substantial, if not binding, commitments by financial non-state actors to responsible investing. In the meantime, voluntary commitments create a forum in which interested non-state actors – individuals, NGOs and corporations – may participate actively in the development of corporate human rights responsibilities.