Public concern
In Canada, growing public concern over the role of corporations led to the establishment of the Canadian Democracy and Corporate Accountability Commission (CDCAC), a privately funded body which studied how to encourage greater CSR on the part of Canadian corporations. CDCAC conducted public opinion polls and found that “72 per cent believe that corporate executives should take social responsibility concerns (impacts on communities, employees, the environment and charitable activity) into account in pursuing profits.” In contrast, only 20 per cent believed that the only responsibility of a corporation was to enhance its competitiveness and profits.

Concern over corporate activity amongst the general public is reflected in the establishment of NGOs to advocate particular policy positions. These bodies have grown in number from the 1960s onwards, with some achieving considerable influence, including consultative status at the United Nations.

Many major international NGOs, including Greenpeace, the World Wildlife Federation and Oxfam, have specifically targeted the corporate sector to encourage action in areas as diverse as human rights, the environment, labour and other externalities, areas frequently advanced as a component of CSR.

Governments have responded to the public pressure regarding the effects of corporate conduct on both the environment and the community at large with both legislation, and support for voluntary CSR initiatives. These efforts may be illustrated by observing that a number of countries, including Canada, the U.K., Germany, France and the European Commission have departments, which have specifically undertaken considerations of CSR.

Business case
A number of studies have supported the argument that corporate involvement in CSR activities may serve to enhance profitability. As early as 2001, the Financial Times noted that “even on a sector-by-sector basis, shares of companies with a superior environmental or human rights record appear to outperform.” Similar observations have been in the mutual funds industry, with socially responsible investing growing at a rate markedly faster than the industry as a whole.

These beliefs are reflected in the practice of socially responsible investing (SRI), which has taken hold among some investors, and encourages the consideration of the “social and environmental consequences of investments.”

In the United States, SRI has been observed to be growing at a faster rate than all other investment assets under professional management, with the total value of SRI assets estimated at $2.71 trillion in 2007. Thus, the adoption of a corporate position on CSR may be seen in part as a response to shareholder demand.

The suggestion that corporate actors need to engage in CSR activities to benefit society has been criticized by those who believe that companies run solely to profit their shareholders. That the pursuit of profit may serve a social purpose has been recognized from the emergence of free market systems in the 18th century.

In the modern context, it has been suggested that profit may be viewed as a measure of the value that a corporation creates for society, if the price that people are willing to pay for goods reflects the value that people attach to them, and the costs associated with production reflects the cost incurred by society in their production. A company run solely for profit would further benefit the public by supplying its employees with wages, its customers with a product they desire, and may in turn act as a customer to companies which supply it with the goods and materials it needs to conduct its own business.

Further, if the company is to persist, all of these groups must be satisfied in their transactions with it. Thus, the company’s self-interest provides a powerful incentive to benefit groups with a direct interest in the corporation’s actions, provided that it is properly situated in a competitive market.

The number of voluntary initiatives promoting compliance with numerous CSR standards has expanded in recent years so that they now number in the thousands.  As they are created without the need for a legislative process, such initiatives may be implemented more quickly than a legislative response. As such, they may offer a means to address sudden or rapidly developing issues.

Furthermore, as such standards are privately adopted and implemented, they do not require administrative or financial support from the government in order to operate.

Voluntary initiatives
The lack of a legislative process also provides a greater ability for voluntary initiatives to be tailored to the needs of the industries they are targeted at. This stems in part form the fact that they may be drafted and implemented by the very corporations or industry groups they are ultimately intended to apply to. In turn, this adaptability to corporate needs may encourage greater compliance, or more rapid adoption. The process of drafting, adopting and implementing voluntary CSR programs may also encourage cultural changes within the corporation, promoting proactive actions by the management responsible for adopting the standard.

However, while voluntary initiatives do have several advantages, they have been criticized, particularly with regard to their non-binding nature, which has lead to questions regarding their effectiveness in practice. In fact, a 2003 study by the Organization for Economic Cooperation and Development has suggested that few voluntary initiatives with respect to the environment have resulted in improvements significantly above the outcome that might have bee expected without them.