3 opportunities to strengthen good governance and corporate resilience

Trust in global institutions, including multinational companies, is under increasing scrutiny. A 2025 report shows a 21% decline in confidence in business leaders since 2021.

In the febrile political environment prevailing in many countries, this highlights the importance for companies to actively demonstrate their long-term value creation, societal trust and operational legitimacy.

Resilient good governance can be a key enabler of integrity and trust in business. What remains uncertain is how well boards grasp this dynamic and whether they are equipped to address it effectively.

While sustainability standards have gained prominence in corporate disclosure, their ability to drive genuine accountability, build trust and support resilient governance remains inconsistent, especially with pushback in some jurisdictions.

“Companies have to walk a fine line between business decisions and cultural battles, making it harder to uphold a cohesive social contract with stakeholders,” said Nerissa Naidu, Chair of the Board at CreditXpert and a member of the World Economic Forum’s Global Future Council on Good Governance.

She added that the lack of consistent stakeholder engagement policies and reactive crisis management hurts resilience, as other council members shed light on how to build corporate resilience through trust-based good governance.

Corporate governance challenges in 2025 can be summed up in the following three ways:

In many jurisdictions, systemic corruption, politicized enforcement and weak legal institutions undermine governance, eroding trust in both governments and companies. This reinforces the need for businesses to build resilience by strengthening their social licence.

“The undermining of the rule of law generates uncertainty and a lack of trust, and threatens the basic principles of good governance,” said Delia Ferreira Rubio, former chair of Transparency International.

Governance and sustainability goals are undermined by short-term incentives that prioritize quarterly or tenure-linked metrics over long-term planning, while reporting frameworks fail to capture real-world impacts and lasting value.

“Despite pledges of long-term vision, decision-making is trapped in short cycles – CEOs average 5-7 years, fund managers face quarterly reviews and politicians run on 2–6-year terms,” said Eugene Soltes, Professor of Business Administration at Harvard Business School. “These horizons create incentives that undervalue long-term risks and opportunities.”

Michèle Sutter, Professor of Organizational Control and Governance at University of St. Gallen said: “Remuneration structures often misalign incentives, rewarding short-term gains over long-term stability.”

The rapidly expanding national and international regulatory landscape creates fragmentation, overlapping obligations and compliance fatigue. Companies, especially small- and medium-sized enterprises (SMEs), struggle with data-heavy due diligence, high costs and inconsistent interpretations, exemplified by tensions between the German Supply Chain Act and the EU’s Corporate Due Diligence Directive.

“Over 40% of large firms lack visibility on indirect suppliers, while SMEs, with fewer resources, struggle even more to meet due diligence demands,” said Anahita Thoms, partner and head of international trade, and chair of the advisory board at law firm Baker McKenzie.

Katharina Weghmann, global leader at EY’s Centre of Excellence for Ethics and Business Responsibility said: “Companies navigate impossible mazes of conflicting requirements across jurisdictions. Legal compliance in one market can violate stakeholder expectations in another, making regulatory arbitrage a reputational liability.

“Boards have a tough time navigating this and making sure to provide sufficient oversight on executive decisions.”

By recognizing these challenges, there lies an opportunity to recalibrate corporate governance models, shifting from reporting-heavy box-ticking to approaches that genuinely reinforce resilience and long-term value creation.

“Corporate governance and a culture of ethics and integrity can provide strategic direction and orientations in times of uncertainty. The current sustainability 'halt' can be used as a strategic inflection point to future-proof sustainable business models for real based on good governance,” said Maira Martini, chief executive officer at Transparency International.

These opportunities include:

Reimagining corporate governance allows organizations to shift from mere compliance to leveraging trust, transparency and anti-corruption as competitive advantages, especially in fast-moving sectors, such as technology and emerging fields, such as AI, where frameworks are still evolving.

Far from stifling change, well-designed governance can be agile, cross-functional and a catalyst for innovation.

“Corporate structures are not yet built to govern AI effectively,” said Laetitia Cailleteau, managing director and EMEA responsible AI lead at Accenture.

“Effective AI governance requires integration across business, IT, data, risk, compliance, security and environmental functions – areas that too often remain siloed with little shared language or fluency. Without this, an ‘AI-ready’ enterprise is out of reach. Boards, too, must step up with more proactive, informed oversight,” Cailleteau said.

Together, these developments present momentum for designing governance not as a static rulebook but as a strategic enabler of innovation, legitimacy and long-term value creation.

To strengthen governance, incentive structures must evolve to reward long-term outcomes such as sustained trust with stakeholders, investments in human capital or the responsible scaling of technology.

There are lessons to be drawn from family-owned businesses, which often prioritize generational stewardship over quarterly results: from institutional investors, whose fiduciary duty spans decades rather than years and from academia, where knowledge creation and societal contribution outweigh immediate returns.

Governance structures must define temporal responsibilities, tying commitments and compensation to long-term outcomes while considering the impacts across various time horizons.

An OECD study found that 68% of all sustainability metrics measure company policies and activities rather than outcomes, resulting in a diversity of standards and confusion.

Drawing on impact investor Ronald Cohen’s work, the focus must shift from measuring processes to rewarding tangible results – from improved environmental performance and inclusive hiring to stakeholder trust and long-term value creation. The goal is not more reporting but better outcomes that are visible, verifiable and valued.

Finally, the far-sighted will work ever more closely with their own workers and communities in which they operate, thereby strengthening their social operating license.

Together, these steps can transform governance from a fragmented exercise into a coherent, outcome-driven system. The importance of an effective internal organization driving this change cannot be overemphasized for good governance mechanisms to flourish. Too often, the respective activities and resources in companies are siloed and lack horizontal alignment, which is crucial for governance and risk management purposes.

An integrated assurance approach, linking corporate governance, risk and crisis management, compliance and controls, is needed to make the good governance efforts truly effective and impactful over time.

Honourable Neema Lugangira, former Tanzania Member of Parliament, said: “True stakeholder engagement must go beyond compliance and toward co-creation, equity and shared value. Community voices – especially women, youth and Indigenous peoples – must be structurally embedded in governance.”

The World Economic Forum’s Global Future Council on Good Governance is actively working on these opportunities, with a focus on shaping the future of governance that is resilient, inclusive and long-term oriented.