We know governance is constantly changing based on global trends and issues. While working on all current needs, we must also consider and evaluate emerging trends which will keep all committees busy. Consider these top emerging ones.
Artificial Intelligence
More boards use board portals to provide secure and transparent access to vital information. Intelligent AI tools are underway to provide effective information and board work ahead. Companies are using AI to create images, do specific tasks, create videos and more. The security risks about this use in the business require board evaluation for the business and new governance practices it will require. New technology may introduce new ethical issues. Shareholders are already concerned with boardroom practices and new technology will likely intensify the ethical questions boards face. Boards will need to proactively handle ethical concerns related to technology and create plans to overcome the issues.
Need for Effective Systems for Data Sharing
Board responsibilities are expanding, and all require more oversight. The current frustration is outdated reporting. It makes it difficult for directors to access the information they need to make wise decisions. Boards are looking for ways to streamline and centralize reports so they have an effective way to collect and review key information so they can comply with disclosure rules.
Board and C-Suite Succession
Company profiles show high counts of experienced board directors near retirement without younger talent ready to replace them. Companies will need to develop and mentor younger talent with skill sets and backgrounds to provide legal, cybersecurity, finance and data analytics skills most boards need to direct their company into future success.
Board Evaluations
Investors and Consumers are highly focused on-board effectiveness. They are demanding board directors and company executives who more than fulfill their fiduciary duties. They want more integrity in improving the overall business performance and impact. Thus, boards need to assess how they are performing, based on their composition, contributions to the business performance, diversity and oversight. Independent board evaluations annually are vital.
Global Activities
Boards must stay current on the impact of the latest governance issues and focus across the globe. This includes:
- ESG reporting as a high priority across the European Union. They are creating the first Corporation Sustainability Report Directive (CSRD) with total adoption planned for 206.
- Asia-based shareholder activism on the heavy rise. Shareholders push against companies they see as undervalued and demand to see more value in their investments.
- Corporations in LATAM now reassure investors by filling legal gaps. In Latin America, regulators were slow to create legal reforms to protect investors. Thus, shareholders hesitated to invest. The gaps are resolving. Boards can use corporate governance practices that offer assurances, greater transparency, and stricter disclosures comparable to other global standards.
- The Israel-Palestine War challenges board economically and ideologically. As both sides suffer tragedy in the crisis, boards must navigate ideological differences among directors, the interests of the company and of the customers. This raises challenging conversations. Directors will need to listen with compassion and understanding. War can exacerbate economic hardships, e.g., inflation and oil prices that impact on regions across the world. This can affect the strategic direction of many companies.
Stay Current and Planful
As we say, the skill of a great director is “never sleep” as governance changes overnight all the time. Feel free to contact us for help with managing the emerging work ahead. We provide support and guidance, as well as independent board evaluations.
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