Boards of Directors ideally provide the impetus for the company to grow and succeed. They offer essential guidance to company executives in sustaining the vitality of decision-making processes, maintaining accountability, and stimulating value creation.

Boards are the nexus where the fortunes of the company are often ultimately decided.

Boards must be firm in purpose but agile in action. “To be agile, one needs to be alert and sensitive to what is happening in the business, market and operating environment, open to new ideas and able to think and exercise independent judgement” (Coulson-Thomas 2022).

Boards must demonstrate they possess agility defined as continuous responsiveness to change, and the ready capacity for transformation when required matching the speed and nature of technological change, the capabilities of competition and the imperatives of environmental sustainability.

Boards always face challenges navigating technological transformation, social change, economic growth, and market competition. But Boards of the future will face complex and compounding challenges of a different order of magnitude.

The combination of globalization, digital technological disruption, environmental crisis, and growing stakeholder activism makes much greater demands upon Boards. Possessing the alertness and capability to meet these demands will define the most successful Boards.

Boards today face competing demands and continual tensions to balance conformance and performance, to monitor the present while preparing for the future, and to endorse strategy formulation. This reflects the multidimensional roles and responsibilities of Boards and directors. The art of directorship is to keep all these duties in balance, and to avoid an entire focus on single functions (Tricker 2018). Boards need to be capable of concentrating on the greatest challenges, but ambidextrous enough to deal with all essential responsibilities.

 The Reform of Board Governance

The role of the Board of Directors has always proved demanding, with the task of anticipating the direction of changing technology and markets. Frequent board and corporate failures have led to many efforts at reform historically.  The recent reforms began with the UK Cadbury Code (1992) and have proceeded internationally with the encouragement of the OECD. But Boards and companies now face an unprecedented array of challenges and opportunities.

The dangers of complacency are very real. For example, the highly profitable and internationally well-regarded Australian financial sector was regarded as exceptionally robust and well managed for decades, surviving the global financial crisis much better than in other economies. However, with mounting concerns regarding lack of responsiveness to customer and regulator concerns, the sector faced withering examination in the Hayne Royal Commission, followed by the APRA Inquiry into the CBA, shareholder revolts on executive pay, and the whopping A$1.3 billion fine by AUSTRAC imposed on Westpac for money-laundering charges.

 The Challenges for Boards in the Future

There are multiple and compounding challenges facing companies in the future – which makes business much more hazardous, though also presents potential opportunities. This begins with the technologically driven financial revolution, which means funds move at the speed of light following market signals. This is driven by the digital technological revolution which is rapidly transforming every business sector and every company.

New industries and services are being developed at a pace never seen before, often displacing established technologies with an astonishing speed – as we have witnessed for example with the amount of economic activity loaded onto mobile phones, cloud computing and now with the vast opportunity with AI to achieve higher productivity and new sources of competitive advantage. The Australian Government is anticipating an AI boost to GDP of up to $600 billion by 2030 (Abbot 2023; McKinsey 2019). Well-established industries – such as the global car industry with the arrival of Evs – are turned upside down as Tesla became the most successful car company in the world. This is accompanied by a wholesale transformation of global value chains, in consumer tastes and market opportunities.

Yet all of this is occurring in a resource constrained planet, and successive meetings of the United Nations IPCC (Intergovernmental Panel on Climate Change) remind us of the imminent future impact of climate change upon our community and the natural world (IPCC 2022), and the urgent need to decarbonize global value chains quickly.


With the hype-cycle of Artificial Intelligence (AI) still a long way to run, the uncertain, non-linear, paradoxical, and often chaotic nature of the modern world (associated most keenly with climate change and rapid digital transformation) is sometimes referred to by the acronym VUCA (Volatility, Uncertainty, Complexity, Ambiguity). The VUCA concept was first deployed by the US army and originated in the work of Warren Bennis and Burt Nanus, two management researchers (2007). As Figure 1 indicates Boards today face multiple compounding challenges from financial uncertainty, rapid technological change, new social demands, regional economic configurations, and structurally changing geo-political outlooks, particularly regarding the resurgence of the US economy and the direction of the Chinese economy, and most of all from the ever-present danger of climate change (McGrathNicol 2024).

Some leading Australian companies’ Boards have experienced their VUCA moments in recent decades, particularly in the finance sector.

Preparing Boards for the Challenges Ahead

In this challenging global market, alertness and preparedness are at a premium. That is as part of Board development there must be attention to acquiring and refining advanced knowledge and skills in each of these fields of finance, technology, social change, and environmental threats, and specifically how each of these may impact on their company and industry. The skill set of both managers and directors must be fully attuned to these impending challenges and how they may be resolved. Boards can strive to achieve higher standards in each of these fields, with selected individuals as key experts in each field.

Volatility, uncertainty, complexity, and ambiguity (VUCA) will not go away and is more likely to intensify as the 21st century progresses, but they can be anticipated and prepared for. On the wider horizon we can anticipate:

  • more tumultuous competition among emerging blocks of nations states
  • industries dominated by mega-firms with direct access to granular data about their markets.
  • governments identifying some foreign firms as national security threats.
  • multinational firms having to reconcile demands of their home and host governments.
  • The distinction between for-profit and not-for-profit organisations diminishes as for-profit firms pursue more responsible investments, and not-for-profits have sizable profits.

The most critical new challenge to be managed by Boards is carbon performance, with an effective carbon strategy matching an awareness of the imminence of climate risk (Luo 2021). This is the new zeitgeist of sustainability for Boards of Directors: delivering sustainable value creation will be the key achievement of companies in the twenty-first century (Clarke 2019:2023).

Board Resilience

This all may sound a little other worldly, but if we look at the emerging policies of the world’s largest investment companies this is precisely where they are at. Blackrock with over US$9 trillion in investment funds in 2023 is pushing Boards on their resilience to the “new economic regime” ahead in the transition to a low-carbon economy fueled by Artificial Intelligence (AI).

Blackrock regards alertness to the changing macroeconomic and geopolitical backdrop as essential to building resilience. Blackrock identifies four structural shifts that will shape the new economic regime:

  • digital disruption and artificial intelligence (AI)
  • geopolitical fragmentation and economic competition
  • the low-carbon transition
  • demographic divergence

Resilience in these uncertainties will impact upon future company earnings Blackrock believes (Jesop 2024).

Accountability and Diversity on Boards

The potential for greater risk must be matched by greater preparedness and better relationships with all stakeholders. In fact, good stakeholder relations provide the foundation for more ambitious strategies. “Boards should learn how to work with the firm’s purpose, make it consistent with the firm’s strategy. A strategy road map should include various dimensions: what makes the firm unique, its value proposition for customers, the required capabilities, and resources to compete, specific strategic choices to sustainably create economic value and the type of firm the board would like to develop in the long term” (Canals 2022).

Operating in a particularly volatile industry the UK Financial Reporting Council has developed a Stewardship Code (2020), which states:

“Principle 1 Signatories’ purpose, investment beliefs, strategy, and culture enable stewardship that creates long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.”

The Stewardship Code then outlines how this might be achieved in terms of strategy and culture, conflicts of interest, client needs, ESG integration, engagement, rights, and responsibilities. Hundreds of significant UK finance companies have signed up to this Code. It is an important part of building better relationships with all stakeholders that will help companies to meet the challenges they face.

In turn this openness towards accountability is facilitated by Boards that can build better relationships with all stakeholders. The Board should “ensure the company possesses a culture that fosters collaboration, customer orientation, initiative, accountability, transparency, diversity, inclusiveness and integrity, all of them qualities that help develop the organization for the long term” (Canals 2022).

The call for greater diversity on Boards reflects the need to broaden thinking particularly regarding a longer-term perspective, purpose, and stronger and more insightful relationships with all stakeholders (Stiles 2021):

“The composition of a Board should reflect a complementary diversity of thought, background, skills, experiences and tenure. The Board of Directors should develop a system for identifying diverse candidates, including women and minority candidates, and for effectively integrating new members into the Board dynamic. ”

What is certain is that exciting and disruptive times lie ahead for all companies, and the roles of Company Directors are becoming more complex. The preparation to prosper in uncertain times must be advanced as soon as possible.

Green Shoots of Change

In this context of rapid change, the 30% + Club Australia and Deloitte’s Australia in 2022 investigated whether Boards are future fit and considered whether Boards must complement the traditional Director skill sets of governance, law, and finance with the appointment of Directors with professional expertise in digital, marketing/customer and human capital. Two years later they examined whether the profile of Boards had changed, and what impact this had on board performance in five case studies (30%+Club Australia and Deloitte’s Australia (2024).

The cases they examined included bringing the voice of the customer to the Board table, banking on the human capital skillset for Board (and Company) success, deep tech skills for a digital world, adopting a passionate customer perspective and pairing the digital lens with a customer focus to create a visionary Board.

Their review reached the following conclusions:

  • Innovation is happening at the fringes but not yet in the centre of Board communities
  • Recent appointments of non-traditional NEDs were driven by immediate strategic imperatives
  • Recent appointments of non-traditional NEDs delivered an accelerative potential for their organisations
  • A focus on skill and diversity in the boardroom via the appointment of non-traditional NEDs delivered a gender diversity dividend.

The report noted: “Disciplines such as marketing/customer and human capital are female dominated. A focus on board skill diversity is thus likely to also deliver a gender diversity dividend, and much more easily. This added benefit appeared to be something the Boards profiled in this review were mindful of, although not as their primary objective but as a value-add. In other words, at a time of constant scrutiny around gender diversity on Boards, a focus on future fitness through the lens of Board skill diversity has the potential to also deliver sustainable gender balance by widening the pool of talent to include many more female directors” (2024:11).

Building Boards for the Future

Having the imagination, agility and resilience to achieve the transition to a low carbon economy and engage in the total transformation of business processes with AI is a tough call. The economic potential of generative AI will be immense in business transformation (McKinsey 2023). Charting a path to prosperity though an increasingly complex, technologically driven, and climate constrained business environment will require directors with skills to match:

  • Navigating the complexity of the challenges and disruption of the future will require better equipped Boards of Directors.
  • The collective skills and experience of the Board will need more careful balancing.

In this context introducing directors with climate experience, younger directors with high level tech skills, and more women directors will be helpful. (MSCI 2023).


Thomas Clarke is a Fellow of the Royal Society of Arts, and editor of the Cambridge University Press Elements in Corporate Governance book series. Formerly he was Professor and Director at the UTS Centre for Corporate Governance.

References available on request.

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