The top 5 issues for directors in 2025
As directors and boards look towards 2025, the mood is shifting. After years of crisis management, a new phase is emerging. While the global economy shows signs of stabilising, the path forward is anything but straightforward. Inflation may be cooling off and interest rates steadily reducing, but businesses still face the realities of tighter credit and hesitant consumer spending.
New Zealand’s economic recovery feels cautious. Directors are balancing today’s challenges with tomorrow’s opportunities.
In boardrooms, the conversation has changed. As one director put it, “We have weathered the storms; now it is about seizing the openings that follow”. This is grounded in optimism, built on the knowledge that change is inevitable, and those who see the openings can shape the future.
Across the globe, key themes are reshaping the business environment. KPMG’s 2024 Global Transformation Survey highlights that 88 per cent of enterprises are undergoing transformation to keep pace with the digital era. Artificial intelligence, digital tools and the entire ecosystem they create are transforming industries, offering new efficiencies but also demanding strategic oversight.
For boards, the challenge is to think beyond immediate pressures and plan for a future where digital transformation continues to push the pace of change.
Meanwhile, the shift to a low-carbon economy is accelerating, particularly in those countries we trade with. Directors who recognise this will see opportunities in everything from energy efficiency to sustainable product innovation. This is the time for boards to set the pace, not just keep up.
The ‘Top five issues for directors in 2025’ outline the critical areas of focus for boards looking to navigate this evolving landscape:
1. Return on capital: Directors will need to navigate short-term financial challenges by strategically balancing prudence and ambition, leveraging resources to maintain stability while laying the groundwork for future growth and resilience.
2. Governance reform: Directors and boards will have to navigate governance reforms, including changes to the Companies Act 1993, the Charities Act 2005 and the Incorporated Societies Act 2022, by aligning board practices to comply with new duties, liability standards and transparency requirements, while balancing these with proactive adoption of good governance practices that reinforce accountability and meet stakeholder expectations.
3. Climate as a competitive edge: Directors have the opportunity to leverage upcoming climate-focused regulations, such as New Zealand’s XRB standards (with direct and indirect impacts), and international frameworks such as the EU’s Carbon Border Adjustment Mechanism (CBAM), to turn compliance into strategic advantages, ensuring climate strategies bolster brand reputation, enhance (or at least continue) market access, and foster operational efficiencies amid global shifts.
4. Quantum leaps ahead: Boards can position for rapid technological advancements by integrating AI and, before we know it, quantum computing into strategic and risk management plans, investing in digital literacy and adopting quantum-resistant cyber security measures to safeguard data and leverage these technologies for competitive advantage. Boards will also need to ensure there is flexibility to adapt to future developments.
5. The high-performing chair: High-performing chairs, with chairs of board committees as their board partners and successors, are vital for guiding boards through complex challenges, ensuring strategic alignment, fostering a culture where diverse viewpoints are effectively harnessed, and supporting the CEO through complex challenges, while adapting to heightened expectations and maintaining strong governance and cohesive board dynamics.