Business Ethics: History Of The Equator Principles Initiative

1959 Words 8 Pages
Business Ethics
Equator Principles Initiative – Case Study HBSC
History of the Initiative
The year 2002 is a critical year for the Equator banks. It is critical in the sense that these banks convened a meeting in London to discuss the impact their activities on project finance were having on environmental and social related issues. There was a growing concern that the project finance industry was not appropriately involved in making the world a better place to live. This claim, which came from civil groups, tarnished the reputation of the Equator banks, who now responded by convening a resolution meeting to the pressure. The pressure was intensified by the launch of Collevecchio Declaration on Financial Institutions and Sustainability in 2003.
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The case is also similar for HSBC. The primary reason for HSBC involving itself in the Equator Principle was for sheltering itself from the negative publicity NGOs and Civil rights groups were spreading regarding all project finance institutions. The finance market is a totally volatile one and any slight negative notion can greatly affect the market for institutions involved in it.
Besides protecting its reputation, HSBC also gets involved in this initiative as a way of giving back to the society and earning client confidence and appreciation. Modern customers are not only concerned with satisfaction of their needs, but also take a look on how the companies protect the environment and uphold social dignity. As a result, customers only buy products from organizations that are committed in protecting the ecosystem and society at large. They are also more concerned with organizations that respect humanity. Therefore, to maintain its clientele base, HSBC has committed itself in the Equator Principles
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With reference to CSR, organizations operating globally exhibit democratic and privatized modes of governance. CSR initiatives are currently assuming global governance functions at various levels. However, the initiatives represent a “contested terrain.”From the onset, the CSR exhibits a political struggle as it takes over the social responsibilities. Though it assumes social responsibility, the organizations remain to be autonomy. Nevertheless, these organizations are expected by societies to provide certain services through CSR. The argument lies in the fact that these organizations put a strain on the environmental resources. The same is on the production and market practices. The civil groups use CSR as regulatory measure for these organizations.
Looking the issue of CSR as presented by Levy and Kaplan theories on private governance, it can be seen that the activities of CSR is that a global order is being established by multinationals on private basis. Involvement of CSR is perceived as to be displacing the authority exercised by the different. The overall impact, which results from the two facets, is that it improves organizational management. In addition to this, the CSR boosts democracy as well as jeopardizing the authority of the

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