Development Banking ESG Policies and the Normativisation of Good Governance Standards

As investment banks, both multilateral development banks (MDBs) and private sector actors, adopt comprehensive environmental, social and governance policies and standards to circumscribe the projects and activities they finance, these policies and standards reflect and contribute to the formation of a range of widely accepted standards of good governance that are increasingly understood as formal legal or quasi-legal requirements. Such policies and standards promote a number of core ‘good governance’ values, including transparency of decision-making, broad public participation in decision-making and policy formulation, delivery of reasoned decisions, reviewability of decisions, accountability of decision-makers and respect for proportionality in decision-making and respect for human rights, which are prevalent in national systems of administrative law and increasingly applied, mandatorily or voluntarily, to a range of actors including private sector lenders. The ESG policies and standards initially adopted by MDBs, which often incorporate and informally enforce values set down in national and international law on environmental protection and human rights, are now reflected in the Equator Principles adopted by 80 private sector lenders in 35 countries. This tendency towards the emergence of a set of universally accepted good governance standards, applicable to both public and private actors at global, regional, national and local levels of administration, has been described as the phenomenon of ‘global administrative law’. The trend in investment banking towards the adoption and implementation of ESG policies and standards can therefore be explained in terms of global administrative law while, at the same time, the investment banking sector might be regarded as an exemplar of this gradual move towards the development of global standards of good governance practice.