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The report explores the range of roles that public sector agencies play in providing an enabling environment for corporate social responsibility (CSR). The study underscores the fact that actions taken by the public sector can positively support businesses’ overall contributions to sustainable development. The study demonstrates the need to go beyond problematic voluntary-regulatory distinctions in what is deemed ‘CSR’, and explores the dynamic relationship between voluntary approaches and regulation. It makes recommendations on how CSR-related public sector action can be strengthened and encouraged, particularly in the developing world. Citing numerous examples from the World Bank’s client countries as well as from developed countries, CRED’s study reveals that the public sector currently encourages responsible business practices through one or more of four key roles - mandating, facilitating, partnering, and endorsing. Many interventions are not undertaken explicitly as ‘pro-CSR’ initiatives, but nonetheless have the potential to promote corporate social responsibility.

However, the report notes that developing country governments are often constrained in their ability to respond to increasing pressures for CSR-related legislation and enforcement. Weak institutions, lack of knowledge and understanding, lack of financial and human resources, and lack of capacity to maintain standards are some of the main impediments to stronger encouragement of the CSR agenda by the public sector in developing countries. In order to strengthen the CSR-related roles of public sector agencies in developing countries, CRED identifies the following actions:

• building awareness within developing country agencies of the CSR agenda and its implications
• building capacity among southern stakeholders to shape the CSR agenda
• building a stable and transparent environment for pro-CSR investment
• engaging the private sector in public policy processes
• developing frameworks for assessing CSR priorities and developing strategies
• the current capacity constraints on public sector agencies in developing countries to engage with the CSR agenda should not be underestimated. But the opportunities are significant, and there is significant experience to draw on.

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