The paper presents a renewed Habermasian view on transnational multi-stakeholder initiatives (MSIs) and assesses the institutional characteristics of the Equator Principles Association (EPA) from a deliberative democracy perspective. Habermas' work has been widely adopted in the academic literature on the political responsibilities of (multinational) corporations (i.e., political corporate social responsibility), and also in assessing the democratic qualities of MSIs. Commentators, however, have noted that Habermas' approach relies very much on 'nation-state democracy' and may not be applicable to democracy in MSIs-in which nation-states are virtually absent. We argue that Habermas' detailed conceptualization of the institutionalization of deliberative democracy can be applied to transnational MSIs if these initiatives can be said to have their own 'dèmoi' that can be represented in associational decision-making. Therefore, we develop a definition of the dèmos of an MSI based on the notion of collective agency. Subsequently, we explain how Habermas' approach to democracy can be applied to MSIs and show that it has more to offer than hitherto has been uncovered. Our illustrative analysis of the EPA confirms the criticisms regarding this MSI which have recently been articulated by researchers and practitioners, but also yields new findings and possible avenues for the further development of the EPA: That is, although our assessment suggests that the EPA in its current state is still far from being a democratic MSI, the possibility of a sensible analysis of its democratic character indicates that transnational MSIs can, in principle, help to fill governance gaps in a democratic way.
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.
Abstract: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 scopefocusing 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'.
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