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June 4th, 2013 marks the formal launch of the third generation of the Equator Principles (EP III) and the tenth anniversary of the EPs – enough reasons for evaluating the EPs initiative from an economic ethics and business ethics perspectives. In particular, this essay deals with the following questions: What are the EPs and where are they going? What has been achieved so far by the EPs? What are the strengths and weaknesses of the EPs? Which necessary reform steps need to be adopted in order to further strengthen the EPs framework? Can the EPs be regarded as a role-model in the field of sustainable finance and CSR? The paper is structured as follows: The first chapter defines the term EPs and introduces the keywords related to the EPs framework. The second chapter gives a brief overview of the history of the EPs. The third chapter discusses the Equator Principles Association, the governing, administering, and managing institution behind the EPs. The fourth chapter summarizes the main features and characteristics of the newly released third generation of the EPs. The fifth chapter critically evaluates the EP III from an economic ethics and business ethics perspectives. The paper concludes with a summary of the main findings.
Challenging voluntary CSR-initiatives – a case study on the effectiveness of the Equator Principles
(2015)
The Equator Principles (EPs) are a voluntary and self-regulatory Corporate Social Responsibility (CSR) initiative in the field of project finance. The EPs provide a number of principles to businesses to reduce the negative impacts of lending practices linked to environment-damaging projects. The paper argues that the actual impact of the EPs even now as revised version is still limited. This is due to their voluntary nature and their lack of adequate governance mechanisms, that is, enforcement, monitoring and sanctioning. With the help of RepRisk, which provides a database capturing third-party criticism as well as a company’s or project’s exposure to controversial socio-environmental issues, the paper evaluates the on-the-ground performances of the two ‘Equator banks’ Barclays and JPMorgan Chase and compares their performance with the one of the two non-Equator banks Deutsche Bank and UBS. The paper shows that the EPs do not have a substantial influence on the broader CSR-performance of multinational banks due to the EPs’ limited scope – focusing mainly on project finance – and the (still) existing various loopholes, grey areas and discretionary leeway. The paper also gives an overview of the main institutional shortcomings of the EPs and their association and discusses some potential reform steps which should be taken to further strengthen and ‘harden’ this ‘soft law’ EP-framework. The paper thus argues in favor of (more) mandatory and legally binding rules and standards at the transnational level to overcome the EPs’ ‘voluntariness bias’.
4 June 2013 marked the formal launch of the third generation of the Equator Principles (EP III) and the tenth anniversary of the EPs – enough reasons for evaluating the EPs initiative from an economic ethics and business ethics perspective. This chapter deals with the following questions: What has been achieved so far by the EPs? Which reform steps need to be adopted to further strengthen the EPs framework? Can the EPs be regarded as a role model in the field of sustainable finance and CSR? The first part explains the term EPs and introduces the keywords related to the EPs framework. The second part summarises the main characteristics of the newly-released third generation of the EPs. The third part critically evaluates EP III from an economic ethical and business ethics perspective. The chapter concludes with a summary of the main findings.