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 becoming a vital part of many companies' success. And it can boost the performance of our portfolios, too.

CR magazine recently released its "100 Best Corporate Citizens" list for 2013, in which it rated members of the Russell 1000 large-cap index on 325 different elements related to responsible behavior. In the coming weeks, I'll delve into each of the seven categories that contribute to a company's overall score.

Today, we'll look at the corporate governance category, which gets a 7% weighting. Out of the 100 companies on the list, several dozen tied for first place in this category. They include:


Xerox (NYSE:XRX)

Advanced Micro Devices (NASDAQ:AMD)


Occidental Petroleum (NYSE:OXY)

To earn their high scores, the companies above engaged in a variety of good practices, such as having an independent audit committee and an independent compensation committee, as well as having few or no directors serving on more than four boards.

Digging deeper
So what, exactly, are these companies doing right? Here are a few examples of their governance practices:

At EMC, a data storage specialist, nine of its 11 directors are independent, and it lets shareholders have an advisory vote on executive compensation. Directors must be elected with a majority vote, and they're elected annually. In a letter last month, CEO Joe Tucci said, "Experience has shown us that good governance increases EMC's competitive power, enhances the Company's performance, and improves our ability to create more value for shareholders. And that is why EMC strives continually to improve its governance."

Xerox's corporate governance features a 90%-independent board of directors and a long list of guidelines. Directors are expected to serve on no more than four other boards, and are expected to hold a "meaningful equity ownership" in the company. Xerox's four standing committees, on audits, compensation, finance, and governance, are filled solely with independent directors.

Advanced Micro Devices also has a set of governance principles, which include having directors stand for reelection every year, and having no more than two employees as directors at any time. Members of the Audit and Finance and the Compensation committees are expected to serve on no more than two other public boards, and all directors are expected not to overcommit themselves to many other boards.

Exelon, a major electric and gas utility with substantial nuclear energy operations, requires all of its directors, except the CEO, to be independent. Its governance standards include requiring directors to own at least 5,000 shares of company stock (recently worth about $180,000). Directors are also expected to disclose any conflicts of interest regularly.

Occidental Petroleum's governance policies include requiring at least two-thirds of directors to be independent ones. Directors are elected annually and must own at least 5,000 shares, which translates to about $400,000 these days. Key committees, such as Audit, Compensation, and Governance, are to be filled solely with independent directors.

Earning well while doing good
Companies doing good can boost your portfolio's performance. And various other studies have suggested that socially responsible investments are at least competitive with the overall market, if not outperforming it on occasion. That's a solid motivation for even the most coolly rational investors to take social responsibility to heart.

If you're in the market for solid socially responsible candidates for your portfolio, check out the real-money portfolio run by my colleague Alyce Lomax. Out of all the Fool portfolios in the group, hers was recently in first place.