Surveys & Benchmarking
NACD Directors' Pulse Poll: Q3 2023
Concerns about increased regulatory requirements and the political environment in Washington, DC, increasingly weigh on the minds of directors, according to NACD’s third-quarter, 2023, Directors' Pulse Poll. The brief survey asks directors to identify the top five trends most likely to affect companies in the coming year.
Advances in Artificial Intelligence (AI) remains a top-five issue after rising to the fifth spot last quarter. It has been almost a year since the release of ChatGPT, which exposed many directors to the potential of AI in general, and generative AI in particular, as never before. As a result, many boards and directors have increased their focus on the potential of the technology for their companies, as well as their own oversight duties. In mid-September, NACD released the report, Director Essentials: AI and Board Governance. This report explores both the opportunities and the risks associated with the advancement of artificial intelligence and its implications for boards’ fiduciary responsibilities.
Increased Regulatory Requirements
“Increased regulatory requirements” has steadily proceeded up directors’ priority lists. In Q3, it is the second-most-selected issue, after ranking sixth in the first quarter and fourth in the Q2 poll. Respondents cited several different specific regulations that motivated their inclusion of this issue in their top five. Among the most widely mentioned were regulations related to climate, at both the state and federal level. At the state level, two climate-related disclosure bills were passed in California in September. The Climate Corporate Data Accountability Act relates to emissions disclosures, and the Climate Related Financial Risk Act requires the disclosure of certain climate-related financial risks. Meanwhile, at the federal level, boards are anticipating when the SEC will move forward on last year’s proposed ruling on climate-related reporting for publicly traded companies. Directors seeking more information on the issues identified by these regulations can find guidance in NACD’s Director Essentials: A Director’s Guide to Carbon Accounting.
Increasing Polarization in the United States
The concerns around political polarization in the United States are increasing, jumping from the 12th-most-selected issue in Q2 to the ninth-most-selected issue in Q3. Many respondents lamented the apparent impossibility of “getting anything done in Washington.” It should be noted that these sentiments were registered even prior to the recent dramatics in the United States’ Congress, in which Representative Kevin McCarthy was removed from his post as Speaker of the House. Until a new Speaker was elected, no official legislative work could proceed. From the perspective of directors and boards responding to the poll, the uncertainty in Congress has an “impact on regulatory stability,” and “Makes for [a] challenging regulatory environment.”