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America's Most Responsible Companies 2020
Legal Considerations for a Corporate Social Responsibility Program


Newsweek recently announced its first ever list of America's Most Responsible Companies. This list is Newsweek's ranking of the top performing companies in matters of corporate social responsibility in the U.S. Many listed companies have already issued press releases announcing their place on the list, capitalizing on the positive recognition.

The list illustrates the corporate world's increased interest in considering goals beyond short-term shareholder returns. Last summer's Business Roundtable Statement on the Purpose of the Corporation, exemplifies this trend. By December 2019 over 150 U.S. CEOs had signed on to the statement, expressing the CEOs' commitment to all stakeholders of a corporation, including customers, employees, and the communities in which they operate.

The trend of companies thinking more broadly about corporate citizenship and responsibility is visible in the proliferation of companies developing Corporate Social Responsibility ("CSR") programs and issuing Environmental, Social, and Governance ("ESG") reports. Institutional investors, such as BlackRock and Vanguard, have also implemented ESG investment strategies. Such investors view integrating ESG factors into investment decision-making as a way to manage risk and enhance the potential for long-term value.

Newsweek developed its list in conjunction with the market data site Statista. The team developed the list by first identifying the top 2000 U.S. public companies by revenue. Statista narrowed down that pool of candidates to those that publish a CSR report or similar document disclosing its stated CSR goals and status towards reaching those goals. Companies that met these criteria, but were involved in a major public scandal, were excluded from consideration, perhaps due to the concern that a company may cynically use CSR reports merely to rehabilitate a negative public image.

Newsweek and Statista focused their analysis on Environment, Social, and Corporate Governance goals. They researched relevant key performance indicators for each goal and then conducted a survey to elicit public perception of the companies remaining in the pool of candidates. Each company was then awarded a score based on the data analyzed.

The outcome is a list of 300 public U.S. companies across 14 industries. The top five performers are the tech giants HP, Cisco, Dell, Intel, and Microsoft.

Legal Considerations

If your company wants to integrate CSR considerations into its operations, there are several key legal dimensions to consider. The first is the fundamental doctrine of corporate law that the interests of shareholders are of primary importance in corporate decision-making. In other words, a company's board of directors ought to focus on satisfying shareholders above all others. The shareholder primacy rule does not prohibit companies from taking into consideration the interests of other stakeholders, such as employees, consumers, communities, and the environment. However, when embarking on a CSR program, it is important to work closely with corporate counsel to ensure that the board and management take the proper steps and follow the necessary procedures to ensure that they do not breach a fiduciary duty owed to the company's shareholders.

A key step to developing a CSR program is to ensure your company is currently in compliance with applicable laws and regulations. For example, before announcing a goal to incorporate the interests of employees, you should consult with your attorney to ensure compliance with applicable labor and employment laws. Similarly, a crucial prerequisite to developing a program of customer care is to understand what the law requires regarding customer health and safety and protecting customers' sensitive data.

While announcing CSR goals and issuing ESG reports can enhance your company's public perception and reputation, you should first understand the legal risks of issuing potentially misleading public statements in an effort to bolster your company's public image. For example, the Federal Trade Commission's so-called "Green Guides" are federal regulations regarding marketing claims about the environmental friendliness of a company's attributes, products, and services. The Green Guides identify the types of substantiation that a company should have to back up any claim that the company or its products or services offer an environmental benefit, such as being recyclable or non-toxic.


In short, developing a CSR program could reap benefits for your company. More and more companies recognize that a reputation for social responsibility enhances the company's public perception. Companies are also developing CSR programs to attract investors in pursuit of long-term value. However, before embarking on a social responsibility program it is important to understand the legal landscape.

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