In recent years, increasing attention has been given to the concept of Corporate Social Responsibility (CSR), defined in terms of the responsiveness of businesses to stakeholders’ legal, ethical, social and environmental expectations. CSR has generally been a pragmatic response to consumer and civil society pressures. These have mainly been focused on trans-national corporations (TNCs) serving markets in the North, but often operating in countries in the South. Accusations by governments and civil society of environmental pollution, human rights abuses and exploitation of labour in supply chains, have pressured companies to become more environmentally and socially responsible. However, the business community has also quickly recognized the strategic value of being more responsible and is beginning to align products and business relationships, in particular through their supply chains, accordingly.

Ensuring that CSR supports, and does not undermine, the development of small and medium-sized enterprises (SMEs) in developing countries is crucial to meeting the goal of improving the impact of business on society. SMEs make up more than 90% of all businesses worldwide and are essential to the ‘path out of poverty’ for many developing countries. If CSR demands are protectionist, culturally inappropriate or unreasonably bureaucratic the net effect will be to undermine livelihoods in the South. On the other hand, the SME sector must not be allowed to become a loophole in which polluting, exploitative industries flourish.

Support for SME development can be an important part of the CSR commitment of large companies in the context of responsible supply chain management, and improvements in social and environmental impacts can go hand-in-hand with better quality and management.

In its CSR Programme, UNIDO addresses the need to establish a framework for SMEs that helps translate Corporate Social Responsibility principles into a relevant SME perspective, thereby enhancing their competitiveness and market access.