2025: The Year of Corporate Governance
An array of events is changing the world as we know it, alerting us about not only what we are already experiencing but also what could be to come.
Armed conflicts, political, economic, and sociocultural crises, waves of migration, corruption, crime, misinformation, climate and environmental challenges, and technological advances, especially AI, are shaping a new global scenario.
Companies play a fundamental role in this context because they contribute to development, create jobs and maintain economic stability. But they must also be an example of integrity, sustainability, leadership, resilience and innovation. To do so, they must lead in these uncertain times, positively influence their environment, have the capacity to adapt to changes, and prevent and mitigate risks efficiently and effectively.
Strong corporate governance will allow companies to stand on their own and take advantage of the opportunities presented by adversity to remain competitive and innovative. It can guide them to prioritize the how rather than focusing only on the final results, acting based on a perspective of involvement and concern toward their environment.
This will also help them respond more effectively to increasing regulatory demands and public and governmental pressures.
I have already commented on “The Five Pillars Of Good Corporate Governance,” which help ensure robust and effective governance. Still, I think it is worth highlighting, within these five points, eight key elements to be prepared for:
1. Clear definition of values and purpose: Values are the ethical principles that define the organization's identity and guide its decisions, behavior and corporate culture. Therefore, everything begins with values. Purpose, on the other hand, is why a given action is carried out — that is, what drives it. Companies must define this to understand who they are and where they are going, especially how they will achieve their objectives coherently and responsibly. In addition, for values and purpose to become part of the organization's DNA, they must be instilled in their employees, who are the “ambassadors” for investors, suppliers and consumers.
2. Establish responsible leadership: Today's uncertainty poses challenges that are different from those of a few years ago, so decision makers must respond to current demands and remain attentive to trends and requirements with a comprehensive problem-solving approach. They should consider cooperation — among business leaders, stakeholders and private and public entities — a fundamental pillar for sustainable progress. This is especially challenging in an increasingly fragmented world scenario. According to the World Economic Forum's Global Cooperation Barometer 2024, cooperation breeds strength and resilience, allowing companies and countries to overcome challenges and achieve their goals. Therefore, 2025 requires leaders who, to develop new skills, a broader vision, greater resilience and commitment to working collaboratively, always act with ethics as their principal value to ensure the integrity of corporate actions.
3. Ensure ethics and integrity: One employee engaging in bad practices can be enough to damage the company's reputation and financial prospects. Therefore, prevention is more important than ever in 2025, and it will be essential to have effective compliance programs. These allow us to take on not only the risks inherent to the business but also those derived from uncertainty and constant changes. For these programs to be effective, it will be necessary to identify the risks, apply controls and policies aimed at preventing and mitigating them, involve every department in the company, carry out due diligence in relationships with third parties, and monitor and measure these programs' efficacy to reduce gaps.
4. Incentive system linked to good practices: Companies are made up of people motivated by incentives, so it will be useless to have the best policies and codes of ethics if they only focus on the results and not on how to achieve them. Therefore, an incentive system conditioned on good corporate practices should be established to promote ethical behavior and ensure that objectives are aligned with company policy. Doing so discourages inappropriate behavior with clear sanctions that are duly communicated to the entire organization, while good behavior is rewarded. This includes relationships with third parties, so it is important to comply with the supplier payment policy to prevent possible risks that may harm the entire company.
5. Innovate ethically: AI and other emerging technologies are transforming paradigms and business models. "Adapt quickly and decisively" should be a motto for 2025 — because the world will not wait. Companies must jump on the innovation bandwagon to optimize processes, reinforce their adaptability, stay relevant, and thrive in an increasingly competitive environment. Leaders need to prioritize ethics and responsibility in the development, implementation and use of AI and other technologies, preventing their associated risks and making the most of their competitive advantages. Cybersecurity plays a key role.
6. Transparency and accountability: In the wake of corporate scandals and the crisis of confidence we are experiencing, I'm seeing stakeholders demand greater corporate responsibility to understand who or what is behind a company. This implies greater transparency and accountability that helps them understand the processes and decisions that influence the organization.
7. Management of third parties: It's necessary to know who you are dealing with, whether they are clients, suppliers or strategic allies. Organizations should conduct exhaustive due diligence to ensure that third parties comply with the same internal guidelines, operating ethically and transparently. Even if only one-third party in the chain acts outside the norm or its values, it can involve the company in a corporate scandal.
8. Talent retention: Business challenges will require highly qualified professionals to face a competitive and changing corporate environment. Besides the usual experts, companies today require professionals with special skills who are creative, innovative thinkers and are capable of adapting. Companies must ensure they create an open and respectful work environment and psychologically safe culture, in addition to promoting innovation and organizational growth, to attract and retain the best talent. This can translate into a significant advantage in the market.
These eight points are key to facing a year full of challenges, demands and changes. Companies must ensure that they not only comply with the law but also have a culture of integrity that results in ethical behavior, where 'how' is the guiding word for all actions.
This article was written by Susana Sierra from Forbes and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.
