What are the incentives, costs, and risks of adopting guidelines for corporate social responsibility?
What are the incentives, costs, and risks of adopting guidelines for corporate social responsibility?
Financial institutions have long faced criticism from activists and shareholders for providing funding for projects that have negative impacts on society and the environment. In response, many of the world's largest banks, led by Citigroup, independently developed and have pledged their support of the Equator Principles, a set of voluntary guidelines for socially ethical behavior. Is this a sufficient and effective response to managing the impacts of project financing activities? This case focuses on Citigroup's experience with the Equator Principles and examines the bank's motivations, costs, and risks, and whether similar initiatives would work in other industries.