Corporate governance is entering a new era as boards face mounting pressure to adapt to fast-evolving issues like AI, ESG, and shareholder activism.
PwC’s 2024 Annual Corporate Directors Survey, which polled over 500 directors from public companies across a range of industries, provides key insights into the trends reshaping the governance landscape.
These findings highlight both the opportunities and challenges boards must navigate to stay ahead in a rapidly changing world.
Key Governance Insights and Statistics from PWC's 2024 Directors Survey
The 2024 PwC survey uncovers significant data that reflects the evolving dynamics in corporate governance. Boards are increasingly expected to address complex issues like AI, ESG, and shareholder activism while maintaining traditional oversight functions.
Below are some of the most crucial statistics from the survey:
69% of directors believe their management teams have the necessary skills to execute the company's AI and generative AI strategy, but only 50% feel they receive enough information on the risks associated with AI.
58% of boards report that ESG issues are now regularly part of their agenda, but 58% of directors also say that ESG is not consistently understood by their peers.
71% of directors have taken actions related to actual or potential shareholder activism in the past year, up from 65% in 2019.
25% of directors believe two or more of their fellow board members should be replaced due to underperformance, a record high for board dissatisfaction.
49% of directors say that their board’s assessment process is ineffective, with many viewing it as a "check-the-box" exercise.
35% of boards plan to add financial expertise over the next 12 months, but only 5% will seek environmental or sustainability experts, despite the growing importance of ESG.
75% of directors express concerns over political divisiveness and its impact on their company, while 59% are concerned about the lack of a cohesive U.S. immigration policy.
40% of directors say that increases in board diversity have enhanced company performance, although there remains some skepticism about its impact on financial outcomes.
57% of boards have not discussed their company’s stance on key social issues like diversity, equity, and inclusion, reflecting the ongoing challenge of addressing stakeholder pressures.
These statistics reveal the challenges and opportunities facing corporate governance in 2024, with AI, ESG, board performance, and shareholder activism emerging as the most pressing issues for board directors. Boards must be agile in adapting to these trends to ensure long-term success and resilience.
The Shifting Landscape of Corporate Governance in 2024
In 2024, corporate governance trends are being shaped by the rise of advanced technologies and increased scrutiny around sustainability practices. As stakeholders demand more transparency and accountability, boards are expected to take on a more proactive role.
According to PwC, "The ability to be agile and stay current in the face of uncertainty has never been more important for business leaders." Despite this, the survey reveals that many boards are struggling to keep pace with these changes, particularly when it comes to integrating ESG and AI into their governance frameworks.
The survey, conducted among over 500 public company directors, also found that traditional oversight approaches are still prevalent, with many boards prioritizing financial expertise over emerging areas like environmental sustainability and AI governance.
Corporate Governance Trends 2024: AI and ESG Dominate the Conversation
One of the most significant corporate governance trends in 2024 is the growing impact of artificial intelligence (AI) and generative AI on business strategy.
While 69% of directors believe their management teams have the necessary skills to execute AI strategies, only 50% feel adequately informed about the risks associated with these technologies. This reflects a growing need for boards to upskill and stay informed on the rapidly evolving landscape of AI.
PwC emphasized the importance of closing this knowledge gap: "Boards need to request comprehensive and up-to-date information on both the opportunities and risks to the company of AI and GenAI." Without this, boards may fall behind in their strategic oversight responsibilities.
In addition to technology, ESG continues to play a crucial role in corporate governance. However, there is a disconnect between recognizing its importance and fully understanding it.
The survey shows that 58% of directors feel that ESG is not consistently understood by their peers, even though 66% of boards report that ESG issues are regularly part of their discussions.
Navigating Shareholder Activism and Board Composition
Shareholder activism is another area where boards are taking more proactive steps. The survey found that 71% of directors have taken actions related to actual or potential shareholder activism in the past year, up from 65% in 2019. This indicates growing awareness of shareholder demands and an increasing need for transparency and accountability.
"Boards are becoming more proactive in response to the constant threat of shareholder activism," PwC noted in their findings. Directors are pushing management teams to address key issues before they attract activist attention, with a particular focus on executive compensation structures and ownership monitoring.
At the same time, boards continue to prioritize traditional skillsets in their composition. 35% of boards plan to add financial expertise in the next year, while only 5% are looking to add environmental or sustainability experts.
This shows a clear preference for conventional expertise over the specialized skills needed to address emerging challenges.
Embracing Corporate Governance Trends in 2024 for Long-Term Success
To stay competitive, boards must embrace these corporate governance trends in 2024. This involves staying informed about AI and generative AI developments, integrating ESG into strategic decision-making, and addressing shareholder concerns before they escalate into activism.
As PwC suggests, "Directors need to evaluate whether their current practices are fit for purpose critically."
Boards that embrace change and adapt to the evolving landscape will be better positioned for long-term success.
PwC’s survey underscores the urgency: "The heightened stakes of the coming months should spur new determination to transform." Directors must look beyond traditional governance approaches and focus on agility, innovation, and sustainability.
To access the survey click here.
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