Global trends are transforming the corporate landscape on a consistent basis, making it hard for businesses to keep up with new technology, laws, and innovations. Boards need to be open and flexible to change in order to compete against other businesses and ultimately succeed. The goal should always be to grow, profit, and improve.
With this in mind, we’ve put together the three key traits we believe boards will need to develop and nurture in 2025 to achieve these goals.
3 Key Traits of an Effective Board in 2025:
1 . Improve ESG Reporting
Right now, boards are feeling pressured from investment groups to dedicate more energy and resources to environmental, social, and governance (ESG) performance and action on climate change.
According to a report from InterSearch and the Danish Professional Directors Association, directors think that climate change is the dominant issue that will impact society and economies the most over the years to come.
In addition to climate change, the instability in energy prices and supply, triggered largely by the war in Ukraine, also means organisations need to move away from their fossil-based sources of energy. ESG strategies are already highlighting the importance of a net-zero goal to demonstrate how companies are working to reduce the harm and stress that our planet is under.
ESG Questions for the Board:
- Can we represent investor interests in climate change action and balance them with the needs of the business?
- Are we embracing climate change demands rather than just reacting to regulation and compliance needs?
- Can we demonstrate how we manage energy supply risk as part of our strategy for business continuity?
2. Board Work and New Technology
In 2022, a Gartner survey found that 86% of boards currently rank digital business within their top five priorities. Boards need to have a deep understanding of the potential impact of technical developments, such as AI, in order to consider both the security and the competitive position of their organisation.
Technological advances are incredible for improving board and business function. It’s important that board members, C-suite executives, and chairs are all aware of what technologies and innovations they can use to improve efficiency and efficacy of their work.
Boards adapting to the modern age can also take place in the form of choosing to replace paper-based processes or ad hoc applications with dedicated board portal software.
Questions and Considerations to Help Boards Integrate New Technology:
- Do we understand the risks and opportunities around new forms of technology?
- Can we use new technology to positively impact our ESG and corporate governance performance?
- Do we have plans in place to mitigate security risks related to new technologies?
3. Boards and Diversity
Diversity on boards is an issue that has been around for a while. However, the time for real action is now. Earlier in 2022, the Financial Conduct Authority in the UK said that organisations need to declare whether they have met specific board diversity targets in their annual financial reports. In Norway, there is already a regulation that requires at least 40% of each gender on company boards. There are similar movements taking place around the world.
The most successful boards of the future think carefully and proactively about how they meet these important expectations.
Diversity and Inclusion Questions for Boards:
- Are we canvassing an extended pool of candidates from a wider age range to achieve more overall diversity?
- Do we have a broad enough social perspective to meet modern environmental, social, and corporate governance challenges?
- Does our current board fully support and back diversity, equity, and inclusion (DEI) efforts?
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Moving forward, the most valuable and sought-after board members will develop their understanding of these critical areas to ensure they can provide effective corporate governance and strategic support.
Discover more on the changes that are impacting the way boards carry out their corporate governance role in our new eBook, The boardroom in 2025: Five trends that boards need to respond to now.
