The Equator Principles: An Industry Approach to Managing Environmental and Social Risks (TN)

摘要: SUBJECT AREAS: project finance, business ethics, sustainable development, environmental and social risk, bank lending, regulation On June 4, 2003, ten leading banks announced a new voluntary framework to guide finance lending decisions called the Equator Principles. In years up announcement, non-governmental organizations (NGOs) other civil society (CSOs) had begun targeting sponsoring firms and, more recently, private commercial in high-profile campaigns. NGOs wanted financiers of large projects take legal moral responsibility for damage caused by they financed. While presented Principles as major step toward were quickly attacked many which argued incomplete, if not flawed. Given criticism, decide what do: should encourage export credit agencies (ECAs) adopt Principles, focus on implementation, or respond criticism directly? Although this case was written course it is appropriate variety courses including general management, risk financial institutions, economics. Depending nature course, instructors can tailor teaching plan meet following pedagogical objectives. First, illustrates private-sector attempt promote development. Students must assess whether will help mitigate lesser extent, risks project-financed deals. Relatedly, highlights challenges being pioneer setting standards. Second, examines set standards accountability. how effective are likely be, be done make them (i.e., much kind disclosure needed work? kinds enforcement mechanisms, any, needed? etc.) Third, importance uniformity consistency when establishing industry-based regulations. Failure ensure widespread adoption could result race bottom among institutions their willingness environmentally harmful Finally, students assume role bankers analyze effectiveness financing strategy designed minimize reputation termination risks. Will reduce probability that blocking coalition stakeholders (e.g., NGOs, political opponents, CSOs, delay stop project? Beyond these immediate issues looms larger issue history judge actions taken Banks. seen bold towards achieving negligible with little long-term impact, simply public relations stunt? addition case, there technical note entitled, An Overview Project Finance - 2004 Update, provides background information describes some institutional details rapidly growing field finance.