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Abstract

What drives European Union (EU) policy change in a sensitive and contentious area? To answer this question, this article tells the story of corporate social responsibility (CSR) in the EU from its beginnings until the present. The EU's role in EU CSR has changed from social-liberal standard-setter to neo-liberal cheerleader and back. This article attempts to explain these shifts. It argues that Europe's institutional diversity hampers standard-setting while economic crises and declining levels of business legitimacy facilitate it. Contention has been fuelled by CSR's inherent ambiguity: is CSR a means to regulate the economy, or a domain of voluntary activity that must remain free of state regulation? Fearful of regulation, business groups – German employers in particular – have forcefully advocated the latter view. In addition to converting EU CSR from social-liberal to neo-liberal, business has neutralized two of the Commission's standard-setting advocates. The financial crisis, the power of arguments and discourse, and the impact of global policy developments in the field of CSR have re-empowered standard-setters. The article concludes with a critical analysis of the EU's renewed CSR strategy and non-financial reporting agenda.