The INSEAD Corporate Governance Centre, in collaboration with Heidrick & Struggles and Boston Consulting Group (BCG), unveils a report examining how corporate boards are addressing complex trends and disruptions.
The report, Boards and Society: How Boards Are Evolving to Meet Challenges from Sustainability to Geopolitical Volatility, reveals that while boards have made strides in sustainability, they feel less prepared for other pressing issues like generative AI, trade disruptions, and geopolitical challenges.
Directors and CEOs alike face a volatile environment of conflicting and politically charged demands, with four interconnected pillars – sustainability, AI, trade, and geopolitics – driving the need for resilient and adaptable governance.
The report also uncovers tensions among top leadership, as companies grapple with how best to enhance competitiveness amidst these challenges.
Key Findings
- 77% of boards believe their company should address sustainability concerns
- 36% feel prepared to harness AI’s disruptive potential
- 37% believe their company has a robust geopolitical risk strategy
- 29% of directors lack confidence in their CEO to navigate uncertainty
- 26% of CEOs doubt their board’s effectiveness
- Half of respondents lack confidence in their company’s ability to address sustainability, AI, and geopolitical threats effectively
According to the report, while 77% of surveyed directors feel their company has a responsibility to address societal issues, over half (54%) still prioritise business objectives. Despite high levels of enthusiasm for sustainability, only 36% of directors feel ready to leverage AI, and just 37% believe their companies have sufficient strategies for managing geopolitical risks.
These findings underscore a pressing need for boards to balance traditional governance with forward-looking strategies and invest more in board competencies. Encouragingly, over 60% of directors say their boards are “leaning in” on risk management, signalling an intent to tackle challenges proactively.
Lack of Confidence Amid Growing Complexity
The report highlights a concerning lack of alignment within the boardroom, with 29% of directors doubting their CEO’s ability to manage disruption and create long-term value, and 26% of CEOs equally sceptical about their board’s effectiveness. Roughly half of directors also express doubt that their company is adequately equipped to identify and act on new threats and opportunities in sustainability, AI, and geopolitics, thus limiting their ability to achieve competitive advantage.
As business landscapes shift, boards’ ability to remain cohesive, work collaboratively with leadership, and adapt with innovative corporate strategies will be crucial. Embracing foresight and resilience in governance will allow companies not just to survive but to thrive in an increasingly volatile world.
Sonia Tatar, Executive Director of INSEAD Corporate Governance Centre, commented, “Boards today would benefit from shifting from reactive to proactive strategies. Beyond understanding disruptions, they should look ahead, anticipating future shocks, and finding ways to leverage emerging trends. Translating insights into strategic actions positions companies to become more resilient and adapt effectively.”
Jeremy Hanson, Partner at Heidrick & Struggles and co-author of the report, noted: “While boards are stepping up on sustainability, this year’s survey reveals tensions between directors and management over each other’s ability to manage disruption.
“Alignment between boards and management isn’t just a best practice; it’s essential for navigating today’s complex environment. Constructive debate is crucial for well-rounded, resilient decisions.”
David Young, Managing Director and Senior Partner of BCG, added: “Amid geopolitical uncertainty, rapid technological change, and climate concerns, boards face new, complex challenges. While progress has been made in sustainability, boards can draw from these efforts as they engage in deeper discussions with executives on this expanding agenda.”
