Companies cannot wait to tell people about their corporate social responsibility (CSR) programmes. As a branding exercise, it has proved incredibly seductive. Recently, in a single newspaper, there were 14 advertisements showcasing various corporates’ CSR credentials; and when, in January, The Banker asked financial institutions to submit information for a CSR Q&A, we were overwhelmed with more than three times as many responses as we expected (and would normally receive).
A plethora of environmental, social and governance (ESG) initiatives bear witness to such enthusiasm. One example is the Equator Principles (EP), a voluntary set of guidelines laid down in 2002 by 10 banks under the auspices of the World Bank Group’s International Finance Corporation (IFC), upon whose performance standards the principles are based. In a bid to address social and environmental risks, and to mitigate reputational risk, signatories agree to incorporate ESG concerns into their internal credit risk procedures, and require borrowers to observe standards relating to working conditions and environmental conservation, for example, as a condition for lending on any development projects costing $10m or more.
