· 6 min read
As boards face rising pressure from AI disruption, climate regulation, cybersecurity threats, and geopolitical volatility, governance must evolve from a compliance exercise to a strategic enabler. Drawing on data from the 2025 European Corporate Governance Barometer, this article outlines why boards must embrace structured oversight, data-driven benchmarking, and forward-looking governance practices to remain resilient and relevant. It is a call to action for directors to move beyond box-ticking and shape the future with purpose.
Corporate boards are navigating a world that is simultaneously more complex, more transparent, and more scrutinised.
Once viewed as a compliance function, governance is now emerging as a strategic lever for resilience, performance, and trust. In the face of geopolitical tensions, technological disruption, climate risk, and growing scrutiny around ESG, the question is no longer whether governance matters but how boards must evolve to meet this moment.
Governance must be anchored in facts
Ethics & Boards newly released 2025 European Corporate Governance Barometer, developed with ecoDa, reflects over a decade of research and analysis. Based on 400+ governance KPIs across listed companies, the Barometer highlights both encouraging progress and critical blind spots. Board independence is gaining ground in Europe but still lags the U.S., largely due to the prevalence of family- and founder-led structures. Gender diversity is advancing in boardrooms, yet fewer than 10% of board chairs are women, and CEO diversity remains even lower. Director pay is rising, while external board evaluations have surged by 30% since 2019, an indication that boards are increasingly recognising the value of structured feedback and accountability. At a time when trust is fragile and stakeholder expectations are rising, reliable governance data is no longer optional, it’s essential.
Cybersecurity: A governance imperative, not just an it concern
Cyber risks have moved from the server room to the boardroom. Yet despite their growing strategic relevance, only 2.3% of European boards (Stoxx Europe 600) have a dedicated Cybersecurity or IT Committee, according to Ethics & Boards data. Financial institutions lead, but most sectors remain under-prepared. Regulators are raising the bar: NIS2 in Europe mandates board accountability for digital resilience, while CISA and NIST in the U.S. outline five core board responsibilities, from incident response to cyber strategy oversight. What boards need is not necessarily a new committee, but structured oversight, accountability at the top, and fluency on cyber risks. Cybersecurity is no longer just a technical issue, it’s a governance one. Boards must move from passive awareness to proactive engagement, integrating cyber resilience into enterprise risk management, scenario planning, and strategic decisions.
AI governance: Boards must move from awareness to accountability
Artificial Intelligence is no longer experimental, it’s operational. It reshapes how companies innovate, decide, and compete. But while AI deployment accelerates, governance lags behind. Many boards lack clarity on AI’s strategic, ethical, and compliance implications. The risks are real: bias, opacity, regulatory breaches, reputational fallout. So are the opportunities, if governance keeps up. The EU AI Act and similar frameworks are turning principles into binding responsibilities. Leading voices like the Harvard Law School Forum on Corporate Governance and Deloitte call for board-level AI oversight frameworks, C-suite accountability, and AI fluency across leadership. Boards must ensure alignment between AI use and corporate strategy, values, and ESG commitments. Without it, innovation could outpace integrity. Responsible AI governance is not optional. It’s a board-level duty and a competitive differentiator.
ESG and climate strategy: From disclosure fatigue to strategic leverage
As ESG enters a new regulatory chapter with the EU’s Omnibus proposal, simplification is on the table, but not de-prioritisation. ESG reporting may get lighter, but expectations on substance are rising. Yet, too many boards remain reactive. And while 92% of SBF 120 firms now include climate targets in executive compensation, Ethics & Boards data shows the achievement rates of climate KPIs are significantly higher than for other targets - 4 and 13 points higher than the average of all objectives for the STIP and LTIP evaluated and vested in 2023 respectively, raising concerns about target calibration and ambition. Only 54% of board directors believe ESG is meaningfully embedded into strategy (PwC). The gap between disclosure and direction persists. Governance is the missing link. ESG must move out of the sustainability silo and into the boardroom, shaping committee mandates, investment decisions, and remuneration policies. Simplified reporting should enable, not replace, strategic oversight. Boards that embrace ESG as a lens for resilience, innovation, and capital allocation will lead. The rest will struggle to justify their license to operate.
Geopolitical risks: The strategic blind spot
Despite mounting exposure to geopolitical shifts—be it trade disputes, climate shocks, regulatory divergence, or supply chain disruptions—many boards still treat these as episodic risks rather than systemic ones. Governance practices remain reactive, focused on crisis response rather than scenario planning. The World Economic Forum outlines four approaches for geopolitical resilience: risk assessment, risk reduction, ringfencing, and rapid response. Yet too few companies embed these into their board governance frameworks. As regulatory and macro-political volatility become a permanent feature of the business environment, boards must reframe the question: not “how will we respond,” but “are we structurally prepared?” Do we have visibility across exposure points? Are our governance systems designed for resilience, not just compliance?
The role of benchmarking and board evaluation
To move from intention to impact, boards need more than internal reflection. They need visibility and that requires benchmarking. Self-assessments and external evaluations offer important perspectives, but they risk missing structural blind spots without comparative data. At Ethics & Boards, we benchmark over 400 governance indicators from board composition and executive pay to ESG oversight and geopolitical exposure across companies, sectors, and markets. This enables boards to not only assess where they stand, but to identify best practices, gaps, and realistic pathways for progress. Benchmarking is not about replicating peers. It’s about understanding where your governance stands relative to your strategic context and where it must evolve to meet stakeholder scrutiny, mitigate emerging risks, and future-proof the organisation.
Conclusion: From governance as control to governance as strategy
In today’s turbulent environment, governance must evolve from a backward-looking compliance tool to a forward-looking engine of strategic resilience.
The risks are too fast-moving, the scrutiny too high, and the stakes too large to treat governance as a checklist. Boards must reimagine their role, not just as monitors of past performance, but as stewards of long-term value, equipped to navigate complexity with clarity and confidence.
This shift requires structure, data, and intent. It means embedding accountability into how AI is deployed, how climate targets are set and achieved, how geopolitical risk is anticipated, and how stakeholders are engaged. It also means moving from periodic reviews to continuous benchmarking so that governance is not just reactive, but proactively aligned with evolving expectations.
Governance, when done well, is not a barrier to innovation or growth. It’s the foundation that makes both possible. The time to raise the bar is now.
illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.
