It’s an exciting time to be in the boardroom. Everyone knows the board’s job is bigger, more demanding, and far more important than ever before. Board members are embracing a larger portfolio of responsibilities and deeper engagement with an array of issues. You are listening to more constituencies, evaluating your ability to meet new challenges, bringing on new talent, considering new committees, and investing in the governance infrastructure needed to meet expanding accountabilities. Like all of us, you are letting go of ideas about “getting back to normal,” and trying to envision what’s likely to happen next.

To stay a step ahead of the many risks and opportunities arising in 2022, we are highlighting these ten issues which are likely to hit your agenda.

1. Governance Committees Have Their Year in the Sun

Even while boards work through how to address the Environmental and Social aspects of ESG, the focus will be increasingly on the big “G” this year. Boards will continue their push for more refreshment, new talent and greater diversity, seeking new expertise to solve arising challenges. They’ll also be on the lookout for better data to keep them informed and will upgrade their risk oversight strategies to ensure visibility into ongoing pandemic-related disruptions, cyber threats, supply and labor shortages, health and safety issues and more. In addition to this packed agenda, many will also focus more attention on ways to foster engagement, alignment, and high performance among board members so they can continue to add the most value.

2. All Business is Risky Business

Even a casual read of the business section of any newspaper (or this Boardspan Outlook) is a bit like looking through a kaleidoscope of risk: A company’s best laid plans can collide with cyberattacks, labor shortages, disruptive technologies, regulatory shifts and the multitude of pandemic related factors…the possibilities and combinations appear endless. Boards are well aware of the rise in both the number and potential impact of risks and would be well served to embrace an independent risk evaluation, oversight actions and mitigation strategies that enable them to exchange perspectives with management to thwart the biggest challenges. An added incentive for getting one’s risk house in order: recent lawsuits targeting directors as individuals for alleged failures of risk oversight, including a $125 million settlement following the Boeing Max 737 crashes and an ongoing suit related to the SolarWinds massive cyber breach. Such suits only increase the pressure for boards to focus on risk – and to be sure their D&O insurance is in good standing.

3. Even More ESG

We expect to see boards gaining mastery around their ESG oversight responsibilities this year. Yes, 2021 was all about Environment Social & Governance, but the question on many directors’ lips was: What exactly is ESG and what are we supposed to do about it?! As we move into 2022, directors will be making sense of the enormous collection of issues bundled into ESG and prioritizing specific areas to monitor, approving new reporting standards, and tasking committees with specific oversight responsibilities. We won’t be surprised to see more boards tying executive compensation to Diversity Equity & Inclusion and sustainability goals; focusing on health and safety issues; ensuring robust CEO performance reviews and succession planning; and supporting management’s efforts to foster ethical and compassionate workplaces. All of this action will take place against a backdrop of investors, consumers, and government regulators seeking evidence that commitments to ESG initiatives are making a difference. Boards should be leading this charge and if they’re not out ahead, they’re behind.

4. America’s Got Talent Issues

Boards’ attention to Human Capital matters has never been more important. A priority for many will be helping management navigate talent challenges in 2022: (i) An increasing labor shortage, as people have abandoned the workforce in droves and, for now, remain on the sidelines or are looking for better opportunities. (ii) Retention, as the tight labor market drives up salaries and heightens competition. Acknowledging (iii) employee expectations will continue to be key, as the awakened social conscience of workers raises expectations for more flexibility, benefits, community support, and social responsibility on the part of their employers. We see (iv) employee mobility continuing to be a hot topic, too, as companies wrestle with when and how to return to the office, what kind of policies to set regarding remote work, and how to cultivate a strong work culture that includes training, team bonding, growth & development, and succession planning, all while preventing meeting fatigue and burnout. With so much change in the workplace, boards will need to stay close to these issues and the dynamic nature of talent management.

5. All Eyes On the Prize of Supply Chain Resiliency

With shipping delays, labor shortages, and the domino effects of early-Covid shutdowns and order cancelations, supply chain disruption has become commonplace. Now, with the highly contagious Omicron variant surging across the world and continued stress on materials access, manufacturing productivity, and transportation delays, discussion of strategies to solve for supply chain issues are likely to be a mainstay of the 2022 boardroom.

6. Money: Here Today and…Who Knows About Tomorrow

We’re greeting the new year with record high inflation, signs of unbridled consumer spending and an economic pendulum that could swing dramatically with little notice. The ripple effect on any given company – from pricing and costs to demand and margin – could create waves for many. Further, access to capital, presently abundant, might change, as could the current longest-running bull market in history. Boards are always attuned to their fiduciary responsibilities and in times of financial uncertainty, we expect to see boards spend more of their time and energy understanding specific impacts, outlooks, and possible needs of their companies.

7. One Nation, Divisible By Regulation?

Regardless of who is in power in Washington – or who thinks they are – we can expect to see changes in 2022 around monetary policy, required disclosures, allowable and unallowable corporate actions, acceptable market activities, and more. Whether by lawmakers, courts, federal and state agencies or the executive branch itself weighing in, expect to see positions carved out, sides taken. Expect some unexpected outcomes in the face of politicians reckoning with past promises, the build-up to the 2022 mid-term elections, and the divisive ideologies that define the current moment in politics.

8. After The Pledge, Getting To Net Zero

As a rapid increase in extreme weather events, wildfires, melting ice caps, rising sea levels and other signs of climate change has galvanized public interest in reversing global warming, corporations have responded with pledges to make change in their businesses and those in their ecosystem. Getting from intention to reality is not always easy, though, and the public is beginning to scrutinize company plans and partners, evaluating the likelihood of meeting stated goals. We expect boards to continue building expertise in this area, guiding companies toward measurable progress, and being accountable for ensuring these goals are met.

9. The Activists Are Restless

No surprise that in a time of heightened disruption, activist investors see opportunity. Retailers, carmakers, food service, hospitality, technology and fossil fuel companies are among those bracing for interest from hedge funds and, given the unsettled environment on many fronts, no one is immune. Following Engine No.1’s successful campaign to gain seats on the Exxon board, we expect to see other firms working with institutional investors to make their proposals succeed. Easing the activist’s path, the SEC’s approval of universal proxy cards allows “dissident shareholders” to present their slate of nominees right alongside the board’s proposed slate during a contested election and lets shareholders select from both slates.

10. Meetings, A Virtual Reality

Boards will keep adapting expectations and exploring new paradigms for meetings, aiming to foster the relationship-building and cultural alignment that naturally arise at in-person gatherings, while retaining the convenience and health protections of video calls. We expect to see more boards adopt hybrid models, such as video meetings for committees and some board business, combined with some in-person meetings each year. Acknowledging these needs and the new environment, we see boards placing a premium on the onboarding experience for new members and in governance education or team building initiatives for all members. We also see boards setting higher expectations for well-run virtual meetings that include a thoughtful cadence, engaging discussion on high-priority issues, and facilitation that ensures every voice is heard.

One thing we can be sure of: there will be plenty to keep boards busy this year.

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By Abby Adlerman, CEO and Founder; Kaitlin Quistgaard, SVP Client Solutions; and Jasmin Remram, Content Specialist.