2023 NACD Private Company Board Practices and Oversight Survey

Key Findings:

1. Boards’ focus on artificial intelligence in early stages 

Ninety-three percent of directors believe that the increased adoption of AI tools will impact their businesses, but less than one-quarter (23%) of respondents indicate that the topic of artificial intelligence features regularly in board conversations. Meanwhile, less than 7 percent report that their management teams are very or extremely proficient with AI issues. As the risks and opportunities of AI technology rapidly shift and grow, boards must focus on how they will oversee this new technology domain.

2. Private company boards are working to determine what ESG means for their companies

A majority (55%) of private company respondents continue to believe that ESG programs create long-term value within their organizations. However, only 30 percent of private company respondents indicate that ESG issues have actually increased in priority, compared to more than half (58%) of public company respondents. Private companies’ greatest challenge is the lack of clarity surrounding the definition/scope of what ESG means for the company. Given this, it is perhaps unsurprising that 38 percent of respondents do not feel that their board has been effective at integrating ESG into company strategy.

3. Climate issues are not on the radar of many private company boards

Only 22 percent of private company respondents indicate that the frequency of climate-change-related discussions have increased over the past two years. When asked to describe their board’s attitude regarding climate change, 37 percent of respondents indicated that it was not a concern for their company.

4. As board engagement on human capital grows, more formal oversight practices are emerging 

Private company boards are just starting to formalize their oversight of human capital issues but are less likely than their public company peers to have adopted practices that would bring rigor to human capital oversight. Only 28 percent of private company respondents indicate that their board has assessed human capital-specific experience and expertise to identify board gaps, compared to more than half (52%) of their public company peers. They were also significantly less likely to have reviewed existing charters to ensure adequate oversight of human capital (45% of public companies versus 23% of private) or to have evaluated the effectiveness of the company’s human resources leadership (44% of public companies versus 26% of private companies).

5. Private company board culture affected by lack of diverse perspectives

Twenty one percent of private company respondents considered problematic individuals to be among the most significant barriers to sustaining an effective board culture, compared to 30 percent of public company respondents. Twenty-seven percent of private companies highlighted the lack of diverse perspectives as a significant barrier to sustaining an effective board culture, compared to 18 percent of public companies.