The Trinity and the Dragon: Reconciling Finance, Human Rights and the Environment in China

The Equator Principles experiment in forging a trinity of corporate responsibilities – financial, social and environmental – is now ten years old. By a number of measures, it has been a success. From an initial cohort of ten financial institutions, membership of the Equator Principles has expanded to 73 by late 2011, who together manage some 70% of project finance worldwide. Yet there is one major gap in their coverage, namely the lack of uptake of the Equator Principles by Chinese banks and their mixed record of respecting best practice social and environmental standards in their lending activities. In this article we focus on the importance of China’s commercial banks to the future of the Equator Principles and the obstacles that appear to be preventing them from adopting the Equator Principles. It is not only the size of China’s current and future slice of the international financial pie that makes this an important exercise (three of the world’s top ten banks are Chinese, as are no less than 15 of the top 25 fastest growing banks worldwide), it also casts a unique light on how a non-Western country of increasing significance to global affairs grapples with the vital, but extremely complex, intersections of finance, the environment and human rights.