The role of corporate boards has never been more important, nor subject to as much scrutiny, as it is today. The technological, environmental, geopolitical and socioeconomic transformations of the past two decades are driving a re-examination of the prevailing corporate-governance model, just as they are posing fundamental challenges to many areas of public policy and governance.
In particular, these transformations are making environmental, social, governance and data stewardship (ESG&D) considerations increasingly important to companies' financial performance and resilience. This broad change is eroding the traditional distinction between a shareholder-primacy model of corporate governance (which focuses on financial and operational costs and benefits) and a stakeholder-driven model of corporate responsibility (focused on environmental and social risks and opportunities).
Issues that were previously considered secondary for CEOs and boards — matters once handled by companies' stakeholder-relations, philanthropy and information-technology departments — have become important determinants of firms' capacity to create and sustain economic value. For example, climate change, water management and other aspects of environmental stewardship are increasingly recognized as bottom-line issues in a world where technology, regulation and other features of the operating environment can change quickly.