CSR is closely linked with the principles of Sustainable Development and the principle that enterprises have an obligation to base their decision making not just on financial factors such as profit or dividend but also on the immediate and long-term implications of those decisions, be they social or environmental.

Greater sensitivity to and awareness of ethical and environmental issues has led to heightened interest in the role of business in society. The issues covered include environmental damage, improper treatment of workers, and faulty production that inconveniences or endangers customers, all of which have received heightened coverage in the global media. This has coincided with increased government regulations worldwide on environmental and social issues, with many laws also being set at supranational level by institutions such as the European Union.

Investors and investment fund managers have begun to take account of company policy in making decisions in investment, including "ethical investment". The knock-on effect of this has led to consumers also following the CSR performance of the companies that they buy from, adding to the pressure on companies to operate in an economically, socially and environmentally sustainable way.

CSR is distinctly different to philanthropy, the donation of funds to good causes. A number of global companies have invested vast resources on community projects, the endowment of scholarships and the establishment of foundations. They have also often encouraged their employees to volunteer to take part in community work and create goodwill throughout the communities in which they work, directly enhancing the reputation of the company and strengthening its brand.

CSR goes beyond these ancilliary exercises and strikes at the heart of corporate policy, requiring that any responsible company should take into account the implications of its activities to all stakeholders and the environmental impact of the decision making process. This leads the company to enter into a delicate balancing act, meeting the needs of its various stakeholders while recognising the need to make a profit and reward shareholders accordingly.

As defined by the World Business Council for Sustainable Development, "Corporate Social Responsibility is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large."

This approach to business positions companies as having a key role as partners within their respective communities, rather than the more narrow view of them being in business merely to make profit and serve only the needs of their shareholders.