Business in the Community, set up to promote corporate social responsibility in the private sector, is preparing to celebrate its 20th anniversary next year. Twenty years is a brief association with the subject compared with many of BITC's member companies, some of which can trace their involvement in earlier, philanthropic forms of corporate social responsibility back to the industrial revolution.

But the two decades since BITC was formed against a background of high unemployment, collapsing traditional industries and inner city riots can be seen as a turning point for the private sector. Contemporary businesses have to justify their actions, handle their relationships with wider society, protect their reputations and police their methods of operating to a greater extent than ever before.

That has not driven all companies to seize the corporate social responsibility agenda, but many have. The subject is becoming more professional, with company executives determined to identify and pursue the business justification for social engagement and manage programmes as efficiently as any other aspect of commercial life.

In an enhancement of this more rigorous approach, a group of 20 leading companies are about to begin measuring their impact on society against common criteria, making the results publicly available on a BITC website.

The indicators, covering market-place issues, the environment, the workplace, the community and human rights, are not intended to produce a league table of the best performing companies. But they will, like the UN-inspired Global Reporting Initiative due to be launched early next year, provide a firmer basis for comparing and verifying individual companies' social impact.

These developments come at a time when corporate social responsibility is receiving increased recognition as a core public policy issue. The European Union published a green paper aimed at promoting a European framework for corporate social responsibility this year.

It is wide-ranging in content, addressing both workplace issues, such as lifelong learning, health and safety and work-life balance, and companies' relationships with other stakeholders “beyond their premises”. The green paper calls for greater consensus on the information companies should be prepared to disclose, and for an expansion of the reporting of businesses' social and environmental activities to include such subjects as staff consultation, child labour and human rights.

"A successful commitment to corporate social responsibility means instilling it in business culture from planning, implementation and staff policy to day-to-day decision-making, and being seen to do so,” says the green paper.

Consultation on the document closes at the end of December. BITC member-companies have welcomed its publication as recognition of corporate social responsibility's mainstream relevance.

But while supporting the case for broad global standards, most companies are opposed to trying to advance corporate social responsibility through detailed government or EU intervention and legislation. The EU should, they argue, encourage wider adoption of the UK's experience of the private sector forming partnerships with local authorities and voluntary organisations to build healthier and more competitive local communities.

Many of the government's current regeneration programmes, and forthcoming initiatives, such as business improvement districts and local strategic partnerships, provide ample opportunity for such activity. And the government's drive to extend private sector involvement in delivering public services should stimulate corporate social responsibility, by encouraging companies that bid for public contracts to demonstrate their ethical credentials.

But, in spite of excellent examples of business involvement in local level partnerships, there is still considerable room for improvement in the private sector's relationship with the wider community.

In October, a report by the National Council for Voluntary Organisations and the London School of Economics' centre for civil society took a gloomy view of business's involvement with the voluntary sector, describing it as “patchy and a cause for concern”. The report was a follow-up to the influential Deakin study of the voluntary sector five years ago.

This led to the establishment of a BITC-NCVO taskforce but, in the view of the new research, the taskforce has had “few concrete outcomes”. It says businesses's £315m financial contribution to charity is “a mere 5 per cent” of the voluntary sector's total donated income, with 97 per cent of the £315m coming from only 400 companies, and almost half from the most generous 25 corporate donors.

The private sector can justifiably respond that corporate social responsibility involves much more than charitable donations. But with financial support already at a relatively low level, the research raises legitimate questions about the prospects for corporate charitable support during an economic downturn.

A study of the IT industry by academics at De Montfort and Loughborough universities, supported by Microsoft, shows that companies in the sector expect charitable donations to be one of the first targets for spending cuts even though many of those questioned were unhappy with the current low level of contributions by industry as a whole, and IT companies in particular.

Expectations of what the private sector should be contributing to wider society are growing, sometimes to unrealistic proportions. But, particularly in the light of the intensification of the debate over the ethics of globalisation following the events of September 11 in the US, that is not about to change.