Similar to the two years before, 2022 has been ridden with change and volatility: the aftermath of the pandemic, (trade) wars, inflation, supply chain concerns, political instability, an imminent recession, etc. The list goes on. However, as we walk into the next year, it is only natural to feel optimistic about what this new year will bring. Alas, forecasts for 2023 predict complexity, uncertainty, and a continuation of shifting market conditions. In the boardroom, this means agility, efficiency, and preparedness will be even more paramount as companies depend on the support of their board of directors to navigate the ongoing unprecedented times.
Looking back
While defining corporate governance and operational strategies for the coming year, the board can expect a lot of moving parts. Some trends from the past years are likely to continue to rank high on the board’s agenda. Cybersecurity, digital transformation, ESG, and diversity are predicted to remain a priority next to the usual subjects of business strategy and financials.
For a long time, businesses and boards could get away with glossing over their environmental responsibility. The US Securities and Exchange Commission (SEC) as well as public opinion are forcing companies to get serious about assessing and reducing their ecological impact. The SEC’s new mandatory climate-risk disclosure rule was not finalized in 2022 but is likely to stir up commotion in boardrooms across the country in the coming year. Whether enforced or not, companies and boards should get ready for increased environmental accountability and transparency in their supply chain and production.
Walk the talk
In 2022, the position of the workforce was challenged in both directions from the aftermath of the 2021 Great Resignation to the recent mass layoffs in the tech sector. For the first time, the workforce will consist of five generations. Diversity, equity, and inclusion (DEI) is still the most prominent item on the agenda related to human resources. However, working-from-home or hybrid work formats are making waves in companies and boardrooms as well. The overarching trend is the demand from employees for the board and executives to walk the talk on subjects like DEI and climate change. Consistency is key.
Stakeholder governance
An increased focus on ESG goes hand in hand with a shift toward stakeholder governance. Investor and shareholder interests are no longer the only concern for a forward-looking board. The year 2022 has proven that the concerns of all stakeholders, including employees, suppliers, customers, and even communities or the general public, should be taken at heart when making decisions at the top table. Understanding the correlation between ESG and short-term and long-term success for the company will be crucial in 2023.
Looking forward
In turbulent times, the board should carefully consider, and weigh, investments in innovation and bold business initiatives in technology and otherwise. Artificial intelligence, the ongoing digital transformation, blockchain, climate tech, and other technologies are reshaping industries. From the boardroom to the factory floor, directors will need to add technology oversight to their priority list in 2023 if it wasn’t already on there. Gathering the right expertise and experience around the boardroom table will be necessary to achieve this. At the pace the world is moving, the board can probably expect 2023 to be a challenging year, but at the same time, seize the opportunities it holds.
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