Like most investors, you probably aim for the best possible return when picking potential investments. But as consumers increasingly clamor for companies to embrace social responsibility, good corporate citizenship is fast becoming a vital part of any business or stock's success.

Corporate Responsibility magazine recently released its "100 Best Corporate Citizens" list, in which it rated members of the Russell 1000 large-cap index on more than 300 different elements related to responsible behavior. I've been delving into each of the seven categories that contribute to a company's overall score.

Today, we'll look at corporate governance, which gets a 7% weighting. Dozens of companies got a top rating in this category, including:

  • EMC (NYSE: EMC)
  • Boeing (NYSE: BA)
  • Sherwin-Williams (NYSE: SHW)
  • Consolidated Edison
  • Xerox (NYSE: XRX)
  • Abbott Labs
  • Cisco Systems

To earn their high scores, the companies above engaged in a variety of good practices, including maintaining an independent audit and compensation committee, having an outside majority on the board, not having many directors serving on more than four boards, not employing poison pills as defenses against takeovers, and giving shareholders the right to call special meetings.

Among many other fine accomplishments, here's a quick review of some of the ways these companies earned their honors. EMC is lowering the threshold at which the owners of a set proportion of its shares can call special meetings, from 40% to 25%. (Shareholders asked for it to be set to 10%.) Xerox has a long policy page on its corporate governance positions, pointing to its independent board, stating that directors are expected to attend meetings and shouldn't serve on more than four boards. In its extensive corporate governance nook online, Sherwin-Williams states, among other things, that its audit and compensation committees will be composed of independent directors. Boeing does the same.

Of course, corporate governance is complicated, and practices such as those above don't necessarily ensure good governance. Berkshire Hathaway's (NYSE: BRK-B) board has recently added independent directors, but for the many decades during which it was less independent, few shareholders seemed concerned. Poison pills can also vary in how effectively they're used. In The New York Times, Stephen Davidoff criticized the J.C. Penney poison pill, which served to discourage major shareholders from even talking to each other, while observing that Casey's General Stores using one effectively to give its shareholders time to evaluate a possible takeover. Still, companies employing practices such as those above are more likely to be well-governed.

Companies that do the right thing can not only lift your spirits, but also boost your portfolio. In its first nine years, companies on the "100 Best Corporate Citizens" list outperformed the Russell 1000 over the ensuing three-year period by more than 25%. That's a great motivation for even the most coolly rational investors to take social responsibility to heart.

Click on EMC, Boeing, Sherwin-Williams, Xerox, Abbott Labs, Consolidated Edison, Cisco Systems, and Berkshire Hathaway to add them to your watchlist. You'll get valuable updates as well as immediate access to a new special report, "6 Stocks to Watch from David and Tom Gardner." Click here to get started.