- Title
- The benefits and challenges of implementing the Equator Principles: the case of four large banks in South Africa, through the eyes of project finance teams
- Creator
- Baloyi, Glenda
- Subject
- Financial institutions -- South Africa -- Moral and ethical aspects
- Subject
- Sustainable development -- South Africa
- Subject
- Project management -- South Africa -- Finance
- Date Issued
- 2020
- Date
- 2020
- Type
- text
- Type
- Thesis
- Type
- Masters
- Type
- MBA
- Identifier
- http://hdl.handle.net/10962/126165
- Identifier
- vital:35855
- Description
- The purpose of this research was to investigate the benefits and challenges of implementing the Equator Principles (EPs) by the four large banks in South Africa who are signatories to the framework. This was investigated through the eyes of the project finance teams. The research focused on the perceptions of the project finance team. The EPs are voluntary standards, to date they have been adopted by 94 financial institutions. Financial institutions that have adopted the EPs, benefit by having a competitive advantage of getting involved with high risk projects / developments. The Equator Principles resulted in having environmental and social risk policies and structures to manage these risks. This research was conducted using mixed methods and followed the post-positivist paradigm. The research found that the project finance teams were aware of the environmental, social and governance risks associated with project finance transactions. Furthermore, they understood the need to have the Environmental, Social and Governance (ESG) risk assessment during the credit process. This research found out that the benefits of the EPs outweigh the challenges, as they promote responsible investment, thus promoting the reputation of the investor. The EPs requires the client / borrower to conduct an environmental and social impact assessment and commit to covenants that are binding in the financial legal agreements. By having processes and strategies that promote responsible investment in the financed projects / development, this gives the Equator Principles Financial Institution (EPFI) the advantage of competing in the international market. EPs may indirectly influence the financial institutions that have not adopted the EPs, to promote responsible investment by applying ESG risk assessment processes as required by the banks that have adopted the EPs. EPs lack of capacity such as human resources, policies, funds and structures is the reason why companies do not adopt responsible investment is their operation and not incorporating them in the decision-making process. Some EPFI are not committed the EPs and become free riders. Other EPFI are not complying with the EPs and this causes uncertainties with regards to the legitimacy of the ES standards. EPs are ambiguous, subjective and voluntarism can make it difficult to be achieved by the EPFI. EPs increases the approval process for the financial institution to conclude the transaction, thus delaying the start of a needed project / development. And that EPFI may be forced to have fewer clients as a result of the funding requirements required by EPs.
- Format
- 71 pages
- Format
- Publisher
- Rhodes University
- Publisher
- Faculty of Commerce, Rhodes Business School
- Language
- English
- Rights
- Baloyi, Glenda
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| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details Download | SOURCE1 | BALOYI-MBA-TR20-81.pdf | 860 KB | Adobe Acrobat PDF | View Details Download |