Corporate governance is facing a critical moment. In South Africa, where the IoDSA King IV™ Report on Corporate Governance1 principles guide governance – and King V™ is set to expand this framework – boards must navigate economic instability, technological disruption, and shifting stakeholder expectations while maintaining ethical and strategic oversight. As governance becomes more complex, company secretaries and governance professionals must balance short-term risks such as inflation and AI-driven disruption with long-term priorities like ethics, sustainability, board diversity, and corporate resilience.
In 2025, governance professionals are already dealing with key challenges, from environmental, social, and governance (ESG) compliance and AI risks to cybersecurity threats and board diversity. This article explores four of the most pressing governance dilemmas shaping boardroom decision-making today and what South African governance professionals should prioritise.
Finding the right balance between ESG and profitability
ESG initiatives remain under scrutiny. Investors, regulators, and consumers expect stronger commitments to sustainability, yet economic pressures make long-term ESG investments harder to justify.
In South Africa, JSE-listed companies are required to integrate ESG into their reporting, while industries such as mining, finance, and energy face increasing pressure to align sustainability efforts with business objectives. Boards that fail to strike the right balance risk alienating shareholders or facing regulatory penalties.
How company secretaries and governance professionals can respond
- Embed ESG into financial decision-making, ensuring sustainability initiatives drive measurable value.
- Adopt a ‘double materiality’ approach, weighing both financial and societal impact.
- Engage investors proactively, showing how ESG efforts contribute to long-term business resilience.
- Involve the company secretary and governance professional in aligning ESG reporting across stakeholder groups and ensuring consistent board oversight on sustainability metrics.
Beyond sustainability, another major governance concern is how boards should oversee artificial intelligence, both as a tool for efficiency and a source of ethical risk.
AI in the boardroom: Maximising potential while managing risk
Artificial intelligence is transforming corporate operations, from automating risk assessments to enhancing decision-making. However, AI also raises ethical, regulatory, and data security concerns, leaving many boards unprepared to govern its risks.
With regulations such as the EU AI Act setting new compliance expectations, and South Africa considering AI oversight in financial services and public governance, companies delaying AI governance may soon find themselves exposed to legal and reputational risks. Boards must ensure AI adoption aligns with responsible governance.
How company secretaries and governance professionals can respond
- Develop AI governance policies that address transparency, responsibility, accountability, and compliance.
- Ensure board-level AI literacy, equipping directors to oversee ethical AI deployment.
- Stay ahead of regulatory developments, adapting corporate AI strategies as laws evolve.
- Ensure AI governance is formally integrated into board processes and documentation.
As AI adoption accelerates, so do cybersecurity threats, making digital resilience a top priority for boards. With cyberattacks targeting critical business sectors, company secretaries and governance professionals must strengthen defences against evolving risks.
Strengthening Cyber Defences in an Era of Growing Threats
Cybercrime is a growing threat to businesses worldwide, with global cybercrime costs expected to hit $15.63 trillion by 2029, a 69% increase from 2024. Ransomware accounts for 70% of cyberattacks globally, particularly targeting finance, insurance, and manufacturing sectors.
South Africa has seen a sharp rise in cyberattacks, including the 2021 Transnet ransomware attack, which disrupted major ports, and the Experian data breach, which compromised 24 million South Africans’ personal data. Despite these risks, many boards lack cybersecurity expertise, often relegating oversight to audit committees without a clear risk management strategy.
How company secretaries and governance professionals can respond
- Prioritise cybersecurity as a governance issue, not just an IT function.
- Ensure at least one board member has cybersecurity expertise.
- Conduct regular scenario planning to identify vulnerabilities before crises occur.
- Leverage the company secretary’s role to keep cybersecurity as a regular board agenda item and facilitate communication between risk teams and the board.
Boards that fail to strengthen cyber defences risk financial losses, regulatory penalties, and irreparable reputational damage. As company secretaries and governance professionals rethink risk management, they must also consider who is making decisions in the boardroom, a critical factor in shaping resilient, future-ready organisations.
Diversity at the top: Avoiding tokenism and driving real change
Diverse leadership teams bring better decision-making, yet many companies still approach board diversity as a box-ticking exercise rather than a meaningful effort to improve governance.
In South Africa, where Broad-Based Black Economic Empowerment (B-BBEE) policies and Employment Equity laws influence leadership structures, boards must ensure diversity efforts lead to genuine transformation. With growing scrutiny on whether companies are making real progress in diversity including gender, racial, and skills-based diversity amongst others, superficial representation could expose organisations to reputational damage or even non-compliance penalties.
How company secretaries and governance professionals can respond
- Appoint diverse candidates based on expertise, not just demographic targets.
- Encourage an inclusive boardroom culture, ensuring diverse voices shape decision-making.
- Align diversity efforts with governance strategy, making them integral to business performance.
As these challenges converge, boards must rethink governance holistically, ensuring they are not only managing risks but also shaping a stronger, more resilient future.
Key takeaways for company secretaries and governance professionals
The challenges facing boards today demand strategic foresight, adaptability, and ethical and effective leadership. Governance professionals in South Africa, from board directors to company secretaries, must be prepared to navigate an increasingly complex landscape where ESG compliance, AI governance, cybersecurity risks, and board diversity are under growing regulatory focus.
- Think long-term: Approach ESG and AI challenges with a focus on lasting business impact.
- Strengthen risk management: Cybersecurity and compliance should be embedded into governance discussions.
- Evolve governance structures: Ensure board diversity, ethical leadership, and AI oversight remain priorities.
Corporate governance is evolving beyond risk management, demanding a strategic approach to sustainability and ethics. Boards that embrace forward-thinking leadership will set the standard for the next era of corporate success. The question is: Is your board ready?
Issued by the Chartered Governance Institute of Southern Africa
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