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With multinational businesses stretched by intensifying geopolitical conflict, macroeconomic shocks, and global trade tensions, CEOs will need expert counsel from their corporate boards more than ever. Yet, new data shows that only one-third of CEOs say they are highly confident in their board’s ability to help them navigate the challenges facing their organization. What’s missing? What are CEOs not getting from their boards and how can the confidence gap be overcome?
Key takeaways:
- Only 1/3 of multinational CEOs have confidence in their boards’ ability to support them in times of rapid change, according to new research
- This gap is recognized by boards, as only 43% of directors agree that they give effective support to the CEO during highly complex operating environments
- When effective support from boards is in place, businesses are more likely to achieve their growth goals, and CEOs are more satisfied
- With an uptick of geopolitical tension and business uncertainty, 2025 has been full of public or semi-public conflict amongst management teams and boards
Boards have the responsibility to build a collaborative relationship with their CEOs
The most effective CEOs leverage their board members’ individual expertise just as much as they view them as a collective governing body. Yet, only one-third of CEOs said they are “highly confident in their board’s ability to help them navigate the challenges facing their organizations today,” according to recently published research.
Moreover, for CEOs who feel effectively supported, their businesses tend to meet their goals and perform better than competitors. As shown in Exhibit 1 below, there is a clear business case in addressing the confidence gap expediently, especially in a business context of heightened geopolitical conflict and economic slowdown.
What has caused the additional complexity for businesses in Q1?
In these times of peak complexity and uncertainty, a few areas have rapidly emerged that have brought new questions to the boardroom.
The roll-out of President Trump’s tariff regime has ignited an international response, with markets reeling, inflation risks escalating, and projections for a recession increasing. China’s tariff rate has been increased to 145%, while most other countries remain under a 90-day pause on most high tariffs. As the world waits and sees where the trade policy will land, corporate directors are moving swiftly to support their management teams in identifying strategies to reduce their immediate economic losses.
Board members must address a new tranche of risks and macroeconomic factors in Q1 2025 that were far further down the list of priorities in 2024:
- America-First National Security Agenda. Burgeoning of Political risk and roll-out of national security agenda under President Trump’s first 100 days in office
- U.S. Trade Policy. Trade policy upheaval and retaliatory tariffs from the tariffs the U.S. has created
- Supplier and reputational risks. New risks with the rapid push to onboard suppliers to improve organizational agility and limit tariff exposure
- Monetary policy. Currency shocks and weakening of the dollar’s value
- Global armed conflict. Geopolitical tensions and the likelihood of armed conflict are increasing, be it with the existing conflict between Russia and Ukraine, Pakistan and India, or Gaza
- Critical mineral access. President Trump’s push for U.S. access to critical minerals continues to top the political agenda for the U.S. in its effort to internalize its supply chain
- Energy volatility. Energy policy has sidelined the U.S. incentive structure for the green energy transition, meanwhile, OPEC+ has accelerated production, which has drastically lowered the price of oil and gas
As evidence of the new geopolitical and geoeconomic volatility, see Exhibit 2 below, which showcases the World Economic Forum’s rankings of the top global risks in 2025. The urgency of political and national security issues has forced a degree of deprioritization of environmental-related risks.
Earlier this week, the India-Pakistan conflict cast a shadow over India’s emerging status as a potential economic safe haven for U.S. businesses looking to avoid Chinese tariffs. Despite Indian financial markets remaining resilient, the situation threatens long-term stability and could deter foreign investment.
Apple stands out as a U.S. company that may be highly impacted due to its significant manufacturing investments and strategic reliance on India as a key production hub. Other multinationals operating in India are preparing for potential disruptions, such as power outages, military interference, and local uprisings.
Where do we see this playing out? Corporate governance challenges face increasing public exposure and scrutiny
The dynamic policy and economic environment has put more public spotlight on governance issues and specifically, the relationship between CEOs and their boards. Activists stepping up their demands further complicates the relationship between boards and CEOs. From the first five months of the year, we find several examples:
- Tesla. Due to concerns of his political activities, reports indicated that Tesla’s board considered replacing Musk. However, these have been refuted by Tesla’s chair
- BP. Activist investors, notably Elliott Management and Follow This, have captured headlines by actively challenging BP’s board and leadership, especially on the company’s shift away from renewables and towards a greater focus on fossil fuels
- Lyft. Also facing activist investor pressure to improve its stock performance and governance structure, two board members have been nominated, and they have been pushing for a $750 million share buyback
- Boeing. In a company-wide meeting, Boeing CEO called for the need for a fundamental culture shift within the organization. He asked for a more open culture where employees are encouraged to speak up and communicate across divisions
- Southwest Airlines. Faced with pressure from activist investors, leadership was criticized for failing to evolve the company’s strategy
- Intel. Though there was no public expression of frustration, leadership change and restructuring signaled underlying tensions between the CEO and board. Especially following a 36% stock decline over the past year
- Kohl’s. Former CEO was terminated by the board less than four months into his tenure after an internal investigation revealed he had undisclosed personal relationships with a vendor on a consulting team that made a multimillion-dollar deal at his direction
- U.S. Steel Corporation. Activist investor Ancora Holdings launched a proxy battle against U.S. Steel, seeking to replace CEO David Burritt, who wanted to end the proposed merger with Nippon Steel. With Burritt resisting the merger, analysts flagged the strategic disagreement between the CEO and certain shareholders. Just last month, Ancora Holdings walked away from the fight, even with President Trump calling to review the merger and the imposition of steel tariffs
Actions boards can take:
- Continue to broaden and deepen areas of technical competence to include – national security, political risk, trade and tariff policy, and environmental security
- Identify, deliver, and report on training opportunities for board members on emerging and material topics and risk management
- Engage CEO across a range of topics to improve mutual expectations: (i) vision and mission of the organization, (ii) defining the CEO’s mandate (what the CEO is ultimately accountable for), (iii) the board’s role in understanding the operating context and supporting the CEO, (iv) CEO performance evaluation, (v) communication cadence and depth, (vi) process for identifying technical gaps in board members and availing outside counsel
- Improve enterprise risk management (ERM) framework to broaden definition of political and national security risks
- Evaluate current levels of tariff exposure and supply chain resilience, embed optionality in near-term planning until long-term tariff strategy is clearer
- Create scenarios and potential end-games for U.S. trade policy to improve operational contingencies and short-term resourcing strategies
Questions for the boardroom:
- When is the last time we reviewed the organization’s mission and vision? How are we holding ourselves accountable to their aspiration?
- How does the current operating environment impact our CEO? What new challenges is the CEO facing? How can we best support them during a period of extreme uncertainty?
- What are avenues to improve communication and align expectations between the board and our CEO?
- How can we delineate the variety of experiences and technical capabilities on our board so that it is accessible to the CEO and the management team?
- How often does the CEO receive constructive feedback from the board on where they perceive the CEO needing the most assistance? How is that assistance being offered?
- Have we created the conditions for long-term thinking?
- Where is our business model most vulnerable to the increased risk of armed conflict globally? How are we putting mitigants in place now? What is the likelihood that India’s airstrike could spiral into a broader conflict?
- How will a global economic slowdown create new and unexpected challenges for our CEO? How can we support the CEO in preparing?
Additional Telesto resources:
- Board Series: Know Your Supplier – Diversification risks amidst escalating trade wars
- Board series: How can companies stay ahead of Political Risk under Trump 2.0?
- Board series: Tariffs endgame, calculated or chaotic?
- Atlas, equips your organization’s corporate directors and leaders with the insights and knowledge necessary to stay up to date, mitigate risks, and seize business opportunities associated with sustainability, climate, and ESG
- Prism, our ESG benchmarking tool, helps your organization to rapidly strengthen its sustainability, climate, and ESG performance and disclosures through in-depth benchmarking of industry peers and identification of gaps and areas of distinction
- Recently released by Telesto Strategy’s CEO & Founder, Alex Kruzel, The Courage to Continue: Stay the Course on Sustainability to Secure our Future, explores the connection between corporate priorities and President Trump’s national security agenda
