Governance Trends in 2026: What to expect in the year ahead

2025 has demonstrated once again that rapid and unpredictable change has become the new “normal”. The year ahead is likely to continue to put those responsible for the governance of corporations (i.e. board members) in the spotlight. While it is not possible to predict with any certainty what lies ahead, there are some topics that will continue to rise to the top of board agendas.

1. Increased Scrutiny of Sustainability

Investors and regulators are continuing to insist that sustainability claims made by companies are supported by evidence. There has been a wave of litigation where companies and their board members have been challenged in the courts for making claims that have been difficult to substantiate. This has increasingly come to the attention of regulators who have stressed that deliberately misleading claims are nothing less than fraudulent.

For board members, this means exercising skepticism over reporting and how the company communicates its sustainability achievements to stakeholders. The level of scrutiny should be no different to the care and attention devoted to financial statements. 

In 2026, sustainability-related disclosures will continue to be standardized. The regulatory landscape varies by region:

• In the European Union, the revised European Sustainability Reporting Standards (ESRS) are expected to come into effect for a much smaller cohort of entities under the Corporate Sustainability Reporting Directive (CSRD).
• In the United States, while the SEC has withdrawn climate disclosures under Regulation S-K, legislatures in jurisdictions such as California and New York have mandated them for companies operating in those jurisdictions.
• Other jurisdictions are adopting and adapting the standards issued by the International Sustainability Standards Board (ISSB).

Boards must be satisfied that their reporting is accurate, coherent, and offers a clear ‘line of sight’ to the financials. If a company has ambitious plans to decarbonize, the relevant financial effects should be apparent in the financial statements.

2. Cyber Threats as a Strategic Reality

The frequency and magnitude of cyber attacks are on the increase, crippling operations and often resulting in widespread data breaches. Perhaps the most notable attack in 2025 was at Jaguar Land Rover in the UK, with its operations and supply chain disrupted for over a month. It is estimated that the cost of this attack was over £500m ($670m), with an overall loss for the UK economy of £1.6bn.

The National Cyber Security Centre in the UK notes that any organization relying on digital technology is at risk, as most attacks are untargeted and opportunistic, exploiting system weaknesses. Cyber attacks are putting enterprise risk management systems to the test; it is not an IT issue alone as the impacts trigger risks to operations, litigation, and corporate reputations. The issue is no longer whether a business will be attacked, but when.

The challenge for boards in 2026 is to critically review safeguards and protocols to deal with an attack and rapidly recover operations. Securities regulators in major capital markets, including that of Saudi Arabia, have mandated reporting to the market within days of an incident.

3. Increasing Dependence on AI and Emerging Technology

Many businesses are turning to Artificial Intelligence (AI) to streamline processes, from routine automation to Generative AI that mimics human intelligence. There is an accelerating trend to apply AI across functions like product development, finance, and human resources. What has received less focus is the business dependencies created by third-party providers.

As AI tools are monetized, companies risk being reliant on technology that cannot be easily substituted, with the market captured by a small number of providers. Boards will need to assess how the business deals with these dependencies. From a strategic perspective, AI implications for business processes, cost structures, and workforce planning are massive. Boards must consider what skills are needed to sustain value creation. Crucially, directors will be liable for decisions made by AI applications, meaning governance mechanisms must extend to these activities.

4. National Security and Geopolitical Tensions

The rise of protectionism and receding global cooperation, via trade restrictions or labor movement curtailment, will continue to impact business. Regional conflicts create challenges for businesses with complex supply chains. Governance issues extend beyond risk management to considering the implications for strategy execution. Tariffs are putting pressure on input costs, forcing businesses to reassess their value creation.

The environment is not uniform:

• Countries like Saudi Arabia are actively encouraging foreign investment to internationalize their economy.
• Boards may need to assess the nature and stability of foreign shareholders and how aligned they are with long-term strategy.
• Public sector suppliers are seeing a shift toward defense expenditure, leaving less funding for aging infrastructure in developed economies.
• Business is increasingly expected to address externalities and shoulder environmental and social costs previously managed by the state.

5. Capability Gaps in Boardrooms

A recent survey of board directors in the UK and US found that 39% identified strategy as a strong capability, but only 27% noted business transformation as a strength. This drops to 12% for directors of smaller companies. This suggests that while boards are adept at setting strategic direction, oversight of the change remains an area of weakness.

Conclusion: The Road Ahead

Boards need to approach 2026 with a readiness to adapt to fragile economic conditions and geopolitical uncertainty. Fast-changing conditions can easily distract boards into focusing solely on short-term profitability at the expense of innovation. McKinsey notes that many employees are exhausted; the energy needed to break through the current gloom is currently lacking. Boards should address this by challenging management to drive up employee engagement.

Importantly, 2026 will require getting close to all relevant stakeholders - customers, suppliers, employees, and local communities - to get the perspectives needed for good decision-making. Many boards are stepping up and are well-positioned to provide the oversight and engagement needed to deliver sustained value. As always, good governance will remain a crucial success driver for companies in 2026.

Dr. Charles Mario Abela - Director, Research and Thought Leadership, Center for Governance.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the opinion or position of the Center for Governance.