Legalization of Environmental and Social Safeguards

Abstract

The second case study analyses impacts of self-regulation on international standards for large-scale investment projects, more precisely, on standards that aim to reduce the negative impacts of projects such as hydroelectric dams, pipelines, highways or railroads. Regulation of the negative impacts of these projects has, generally, been undertaken by project financiers who not only commit themselves to so-called environmental and social safeguards but also pass these on to their borrowers, that is, to the corporations implementing the respective projects. Historically, financiers of such large-scale investment projects in the developing world were multilateral development banks. The World Bank was the first to establish such safeguards, followed by the International Finance Corporation (IFC) and many other multilateral development banks. Nowadays, however, commercial banks increasingly take over this business branch and they, too, have committed themselves to safeguards — in the form of the Equator Principles — and have passed these on to their clients.