Boards of directors are confronting an ever-expanding list of critical, complex topics—many of which reflect powerful external trends and disruptions. For the past few years, that list has been driven by an increased urgency to address climate and sustainability issues, and that imperative continues. But other issues—such as the rising importance of generative AI (GenAI) and intensifying trade and geopolitical disruptions—have also become a central part of the board agenda. These interconnected dynamics are forcing directors to navigate an increasingly unpredictable environment filled with conflicting and often politically charged demands.

BCG, the INSEAD Corporate Governance Centre, and Heidrick & Struggles have teamed up to understand how boards are responding to these complex trends and disruptions. This is the third report in our series. Our work this year includes a survey of 444 directors and executives around the world, along with a dozen roundtables that brought together more than 130 directors in North America, Europe, Southeast Asia, Africa, and South America. Our research sheds light on boards’ hard work on these issues. We see that they have made meaningful advances to address sustainability topics and are less confident when it comes to their understanding of and ability to capitalize on GenAI. 

Our work also reveals that the lessons boards learned by addressing sustainability issues are helping them evolve toward a new model of governance. In our roundtable discussions, for example, directors articulated a need to transition from traditional models that primarily emphasize a rearview mirror approach focused on performance and compliance monitoring to a more dynamic approach that stresses forward-looking strategies and adaptability. “Effectively managing uncertainties starts by recognizing their constant presence and developing the resilience to navigate through them as they emerge,” a European director at a diversified conglomerate asserted. Another director pointed out, “You must continue to accept uncertainties; controllability does not exist. This requires resilience from people and companies—and that is far more essential than any specific actions.”

The current reality makes the role of directors more challenging than ever. But it also puts them in a position to add more value than ever. As issues grow more complex, sound business judgment and personal character become just as important as deep business expertise.

Boards confront multiple disruptions   

The societal expectations for companies—and, by extension, for their directors—have never been higher. A majority of respondents (77%) report that boards have the responsibility to address broader societal concerns. Although 54% still believe that business objectives should remain the primary focus, 23% believe that boards should put societal concerns on a par with— or even above—such objectives.

As the role of business in society has evolved, boards are also confronting an increasingly long list of disruptions. Whether it is the rising importance of GenAI, the intensifying trade and geopolitical dynamics, or the variety of topics related to sustainability, the issues on the board agenda are changing rapidly and shrouded in significant uncertainty. At the same time, directors must manage the frequently conflicting demands of diverse stakeholders, including activists, in an increasingly polarized world.

Governance evolves amid change

The sheer number of issues confronting boards, along with the rapid pace of change—and the fact that their traditional responsibilities haven’t gone away—is making the pressure on directors increasingly palpable. When we asked what is blocking the board from spending more time on external shocks and disruptions, the top answer (38% of respondents) is that other important issues are crowding out such discussion. But we do see clear signs that board governance is evolving in this new context.

The push from investors, customers, employees, and other stakeholders to embrace sustainability has been steady for the past several years. And our research finds that boards have made meaningful progress in this area. 

For example, in our 2023 survey, we found that one-quarter of directors lacked confidence in their company’s understanding of how sustainability would impact value creation. This year, that figure stands at just 9%. Last year, 37% said their company lacked the capability to scan for weak signals of future sustainability shocks; this year, only 24% say the same. And last year, 46% of directors said their company lacked a plan to turn sustainability shocks into competitive advantage, a figure that falls to 27% this year. It is likely that efforts to enhance board expertise have contributed to these improvements: a full 74% of respondents indicate that sustainability is a formal part of the board’s competency matrix this year. 

Ensuring a resilient and adaptive board  

Directors in our roundtable discussions made clear that the issues they face are interconnected, unpredictable, and filled with conflicting—often politically charged—demands. The difficulty to fully understand the nuances and consequences can leave boards uncertain and, at times, even paralyzed, potentially leading to delayed decisions and missed opportunities that undermine long-term growth. We encourage boards to take four primary steps to ensure that their governance approach can meet the challenges: enhance horizon scanning and risk management, take a long-term perspective grounded in purpose, lead across the divides, and drive impact beyond business boundaries.

Download the full report for more.

About the author

Jeremy Hanson (jhanson@heidrick.com) is a partner in Heidrick & Struggles’ Chicago office and a member of the CEO & Board of Directors Practice.

Claire Skinner (cskinner@heidrick.com) is a partner in Hedrick & Struggles' London office and the global managing partner of Heidrick Consulting. 

Ron Soonieus (soonieus.ron@advisor.bcg.com) is a senior advisor to the Boston Consulting Group and a director in residence at the INSEAD Corporate Governance Centre. He focuses on corporate governance and sustainability and is based in Amsterdam.