Responsible Finance: Putting Principles to Work

This paper defines responsible finance, both conceptually and in terms of a focus on client protection and social performance management. It explores the state of responsible finance knowledge and practice and explores three mutually reinforcing client protection strategies, namely industry self-regulation, government regulation and supervision, and improved consumer capability.

The paper also describes funder roles in promoting responsible finance and concludes with observations about future implementation challenges. Conclusions include:

• There is much progress in strategies that advance client protection and social performance;
• There are significant gaps in knowledge and practice surrounding each responsible finance strategy;
• New dimensions of responsible finance in the sector include growth management strategies, profit levels and allocation, and proactive governance for the double bottom line;
• Evidence about the business case for responsible finance will be critical to widespread adoption of improved practices in the longer term;
• Global efforts, such as the Smart Campaign, have played a key role in advancing responsible finance.