Faculty of Economics and Business Administration Publications Database

Equator Principles: Bridging the Gap between Economics and Ethics?

Volume: 120
Number: 2
Pages: 205 - 243
Month: Summer
Link External Source: Online Version
Year: 2015

The hypothetical conflict between self-interest, corporate interest, and the common good is one of the hottest debated issues in business ethics. This article focuses on a particular corporate social responsibility approach within the field of sustainable (project) finance, which has the potential—given that certain reform measures are adopted—to overcome the alleged trade-off between self-interest and the common good. The approach is labeled as the Equator Principles (EPs) framework, which celebrated its tenth anniversary and the formal launch of the third generation of the EPs (EP III) in 2013. The article shows how companies can theoretically be both profitable and socio-environmentally responsible by adhering to the EPs. The article proceeds as follows: Before moving on to the EPs, section 2 defines the key terms self-interest and common good. Section 3 then analyzes the EPs from a business ethics perspective. Section 4 shows how the EPs can help in solving the potential trade-off between self-interest and the common good—provided that the EPs are substantially revised. These required reform steps are discussed in section 5. The article ends with a summary of the main findings.