A global survey by Heidrick & Struggles, Boston Consulting Group (BCG), and the INSEAD Corporate Governance Centre reveals that while boards are making progress in sustainability governance, they are less confident in addressing challenges related to artificial intelligence (AI) and geopolitical risks.
The report, titled “Boards and Society: How Boards Are Evolving to Meet Challenges from Sustainability to Geopolitical Volatility,” shows that only 36 per cent of directors feel prepared to leverage the disruptive potential of AI. Additionally, just 37 per cent believe their companies have sufficient strategies in place to manage geopolitical risks.
In contrast, 77 per cent of boards surveyed believe their company has a responsibility to address societal concerns, indicating significant advances in sustainability topics. However, the survey uncovered a lack of confidence between company leadership: 29 per cent of directors do not have faith in their CEO’s ability to navigate uncertainty, while 26 per cent of CEOs are skeptical of their board’s effectiveness.
“While it is encouraging that boards are stepping up on sustainability, this year’s survey reveals tensions between directors and management regarding each other’s capacity to navigate disruption,” said Jeremy Hanson, partner with Heidrick & Struggles and co-author of the report. “With so much at stake—and an increasing complexity to unpack—alignment between board directors and management isn’t just a best practice; it’s essential for addressing both today’s challenges and those of the future.”
Despite lower confidence levels in handling AI and geopolitical risks, more than 60 per cent of directors stated that their boards are “leaning in” on risk management, suggesting a desire to tackle these challenges head-on.
The report highlights an urgent need for greater balance between traditional governance and forward-looking strategies, emphasizing the importance of effective governance that embraces both foresight and resilience.
“Boards today can benefit from moving from being reactive to proactive,” said Sonia Tatar, executive director of the INSEAD Corporate Governance Centre. “By translating insights that inform decision-making into strategic actions, they will be better positioned to guide companies in becoming more resilient and navigating change effectively.”
David Young, managing director and senior partner of BCG, added, “Boards have made notable progress in tackling sustainability—and now there is opportunity for them to learn from these efforts as they engage in deep conversations with executive leadership to confront this expanding agenda.”
As global business landscapes continue to shift, the ability of boards to stay cohesive, align with leadership, and adapt to new challenges with innovative corporate strategies will be more critical than ever.
