Anticipating the Swing of the Corporate Responsibility Pendulum

Boards of directors are encouraged to anticipate a renewed focus on corporate responsibility and ethics, which would be grounded at least initially in corporate self-regulation and new governance principles, rather than in new legislation or enforcement policy shifts.

The American Bar Association has defined “corporate responsibility” as referring to “behavior by corporate leaders that conforms with the law and results from the proper exercise of fiduciary duties, as well as ethical behavior beyond that required by minimum legal requirements [emphasis added]. [1] Corporate responsibility is a respected governance doctrine that first emerged in response to deficiencies in governance, leadership, and professional advice that contributed to the Enron-era financial crises. After being dormant for a number of years, it is now poised to make a boardroom comeback.

A new treatment of corporate responsibility principles would differ from their original iteration in the Sarbanes-Oxley Act and the corporate governance and legal ethics principles it prompted. Those laws, regulations, and principles arose from catastrophic bankruptcies that undermined the credibility of financial reporting and deeply weakened financial markets. Many of the Sarbanes-related efforts were thus focused on topics such as internal controls, financial reporting, accounting improvements, and changes to governance oversight and legal ethics.

Rather, this renewed focus arises from (i) the intensely negative reaction to widespread corruption and graft; and (ii) the normalization of legal ethics violations, and acts of self-dealing and conflicts of interest; both perceived as occurring within the federal government. Critical perspectives on this environment from key stakeholders (e.g., consumers, employees, vendors, community members) may particularly influence new corporate responsibility initiatives. Additional motivation may come from surveys that consistently identify business as the “default solution on societal issues,” with many survey respondents viewing businesses as more competent and ethical than the government. [2]

Such a “second generation” of corporate responsibility principles would be styled as aspirational goals, responding to the integrity-based controversies of the day. They might include the following themes, among others:

Board/Management Dynamic: Assure a shared vision of board and management roles and responsibilities as the framework of any governance-driven corporate responsibility initiative. This is especially true with respect to key elements of the board’s oversight function.

Corporate Mission and Values: Recommit to serving corporate purposes that benefit all stakeholders, including customers, employees, vendors, and the communities in which it operates, as well as its shareholders – and to auditing potential non-compliance. [3]

Conflicts of Interest: Completely review the effectiveness of the board’s conflicts of interest protocols, from conflict identification/appearance of conflict and disclosure to independent review, compliance with state safe harbor statutes, and application to family members.

Risk Profiles: Forego “move fast and break things” and “we’ll deal later with the lawsuits” – styled business strategies and similar approaches that marginalize risk, manipulate the judicial process, and disrespect relevant law.

Independence: Reassert the importance of director independence as a key element of the governance process. Proposed material business relationships between directors and the company should be limited to extraordinary circumstances.

Trust and Reputation: Treat the separate but related concepts of “trust” and “reputation” as valued attributes of an effective enterprise, and prioritize them in board oversight of ethics and integrity, and of the quality of the company’s goods and services. [4]

CLO and CCO Roles: Confirm governance and executive team support for fulsome CLO and CCO qualifications, job descriptions, appropriate compensation, dual-reporting relationships to both the CEO and the board, and job status oversight.

“Flooding the Zone”: Hold directors to a level of service commitment sufficient to position both the board and, by extension, the company, to effectively address the flood of information and executive action emanating from multiple external sources.

“Cutting in Line”: Restrict efforts of senior executive officers to circumvent established approval and appeal processes by bypassing established contact points, in order to prevent collateral damage to the organization.

“Tone at the Top”: Promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law. [5] This includes creating an environment that embraces and rewards the courage to correct (a misguided) course.

Human Dignity: Encourage a leadership culture that is mindful of the benefits of a socially just framework designed to ensure that AI is designed, built, regulated, and used to serve humanity and not to diminish it. [6]

Regulatory environments swing back and forth with changes in the political and business environments. Yet the fundamental theme of a second generation of corporate responsibility principles is one of urgency; i.e., that a renewed commitment to corporate ethics cannot fairly wait for electoral change, given present circumstances and associated public sentiment. As in the past, businesses will be expected to adopt needed changes to ethical standards when the government may be unable to do so.

Yet boards should nevertheless anticipate spirited internal opposition to new corporate responsibility proposals; e.g., Why would we burden ourselves with obligations we’re not required to adopt? How does that make sense? The answers may be many:

• Forms of unethical conduct that stakeholders may tolerate if exercised by government officials will be problematic if exercised by corporate officials.
• New legislation and governance principles responsive to such ethical concerns are unlikely to be formally considered for several years.
• A renewed internal emphasis on corporate responsibility would likely be regarded as evidence of the board’s good faith conduct.
• The initiative is also likely to be favorably recognized by corporate stakeholders, including (especially) the workforce.
• Adoption of new internal governance principles may enhance the attractiveness of service on the company’s board of directors.

Perhaps most importantly, such an initiative would represent the essence of corporate responsibility; i.e., fiduciary behavior beyond that required by minimum legal requirements, that serves to enhance the trust that both the public and government may have for the company.

Archbishop of Canterbury’s House of Lords debate on the human impact of Artificial Intelligence https://www.archbishopofcanterbury.org/node/31/archbishop-canterburys-house-lords-debate-human-impact-artificial-intelligence

1Report of the ABA Task Force on Corporate Responsibility, 59 Bus. Law. 145 (2003). (go back)

2 Richard Edelman, “We Are on the Precipice of a Grievance Based Society”; Time, January 19, 2025. https://time.com/author/richard-edelman/ (go back)

3The Business Roundtable, Statement on the Purpose of a Corporation, August 19, 2019. https://www.edelman.com/newsroom/richard-edelmans-6am-blog/insularity-next-crisis-trust (go back)

42026 Edelman Trust Barometer, January 18, 2026. https://www.edelman.com/newsroom/richard-edelmans-6am-blog/insularity-next-crisis-trust (go back)

5Federal Sentencing Guidelines, Chapter Eight, Sentencing of a Corporation, Section 8B2.1. https://guidelines.ussc.gov/apex/r/ussc_apex/guidelinesapp/guidelines?app_gl_id=%C2%A78B2.1 (go back)

6Pope Leo XIV, Magnifica humanitas: On Safeguarding the Human Person in the Time of Artificial Intelligence, https://www.vaticannews.va/en/pope/news/2026-05/pope-leo-xiv-encyclical-magnifica-humanitas-ai.html (go back)