Caremark and ESG, Perfect Together: A Practical Approach to Implementing an Integrated, Efficient, and Effective Caremark and EESG Strategy

38 Pages Posted: 30 Jul 2020 Last revised: 2 Jul 2021

See all articles by Leo E. Strine, Jr.

Leo E. Strine, Jr.

Wachtell, Lipton, Rosen & Katz

Kirby Smith


Reilly Steel

Princeton University

Date Written: July 30, 2020


With increased calls from investors, legislators, and academics for corporations to consider employee, environmental, social, and governance factors (“EESG”) when making decisions, boards and managers are struggling to situate EESG within their existing reporting and organizational structures. Building on an emerging literature connecting EESG with corporate compliance, this Essay argues that EESG is best understood as an extension of the board’s duty to implement and monitor a compliance program under Caremark. If a company decides to do more than the legal minimum, it will simultaneously satisfy legitimate demands for strong EESG programs and promote compliance with the law. Building on that insight, we explain how boards can marry existing corporate compliance programs with budding EESG programs. By integrating compliance and EESG, corporations can meet growing societal demands in an effective and efficient manner that capitalizes on existing structures. Lastly, we address how EESG and corporate compliance responsibilities should be allocated at the board and senior management level. Instead of separating compliance and EESG oversight, this Essay suggests that boards embrace a functional approach, delegating similar compliance and EESG oversight to the same committee and managers. By situating EESG within the board’s existing fiduciary duties, this Essay provides academics, legislators, investors, and managers with a novel framework to conceptualize EESG while also offering a path forward for boards struggling to place the current EESG movement within their existing corporate structure.

Keywords: Corporate Governance, Social Responsibility, ESG, EESG, Caremark, Sustainability, Corporations, Corporate Social Responsibility, Corporate Purpose

JEL Classification: G18, G23, G32, G34, G35, K22, P12, P16

Suggested Citation

Strine, Jr., Leo E. and Smith, Kirby and Steel, Reilly, Caremark and ESG, Perfect Together: A Practical Approach to Implementing an Integrated, Efficient, and Effective Caremark and EESG Strategy (July 30, 2020). Iowa Law Review, Vol. 106, pp. 1885-1922 (2021), U of Penn, Inst for Law & Econ Research Paper No. 20-45, Available at SSRN:

Leo E. Strine, Jr. (Contact Author)

Wachtell, Lipton, Rosen & Katz ( email )

51 W 52nd St
New York, NY 10019
United States
212-403-1178 (Phone)

Kirby Smith

Independent ( email )

Reilly Steel

Princeton University ( email )

United States

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