Most of the times when business professionals and academics confront the term "Social Responsibility and Ethics of Business", confusions start and questions arise, why a profit-making entity should be responsible? What should be the responsibilities of a business? How can a business respond to the needs of diverse set of stakeholders? Since long the issue has been debated by scholars in west and the concept of CSR is given great importance but research on the issue is very rare in developing countries. Moreover, CSR is mostly considered as liability and tactics, and occasionally thought as a strategic issue. This work is specifically done to elaborate the strategic importance of CSR and corporate ethics. The views of several proponents of CSR have been discussed and in the light of their views, critical importance of the concept is given for petroleum companies operating in Pakistan. A chapter containing major social and ethical issues addressed by petroleum companies in Pakistan is included to understand and relate the concept with goal of corporate reputation and goodwill.