Global Banks, the Environment, and Human Rights: The Impact of the Equator Principles on Lending Policies and Practices

Christopher Wright
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Christopher Wright: Christopher Wright is a Senior Analyst at Norges Bank Investment Management. He conducted this research while he was a Senior Researcher at the Center for Development and Environment at the University of Oslo. His recent publications include “Export Credit Agencies and Global Energy: Promoting National Exports in a Changing World,” Global Policy 2 (2011). Views expressed in these publications are his own.

Global Environmental Politics, 2012, vol. 12, issue 1, 56-77

Abstract: The Equator Principles are a set of operational principles and standards adopted by more than 70 public and private financial institutions to manage environmental and social risks in project financing. This article assesses the impact of the voluntary framework on lending policies and practices, and the environmental and social accountability of financial institutions. It finds that the direct link between the Equator Principles and the International Finance Corporation (IFC), the World Bank Group's private sector financing division, enhances the legitimacy and potential impact of the framework. However, development of lending policies across financial institutions is greatly uneven, and the framework has not stopped lending to projects with significant environmental and social costs. Although the framework has improved relations between financial institutions and stakeholders, a lack of transparency undermines external accountability. The conclusion considers the scope for increased harmonization of environmental and social lending policies in international banking. © 2012 by the Massachusetts Institute of Technology.

Date: 2012
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