Dr. Suresh Nanda is a seasoned corporate and international banking specialist with over four decades of global experience and has worked in leadership positions with well-known DFIs and banks. He is currently active in Private – Equity and Corporate Advisory. He is passionate about bridging businesses with the right partners and opportunities. In this article, described as “Closed-Club,” Dr Nanda speaks about several challenges facing corporate boards in the wake of AI, and the rising ESG expectations when it comes to strategic decision-making.
The Closed Club Culture of Boards: Global Governance Shifts and the Challenges of 2026
Opinion article by:
Dr.Suresh Nanda
Across global markets, corporate boards continue to struggle with what is often described as a “closed-club” culture—a governance model where Board positions are filled through long-standing personal and business networks, or elite educational backgrounds.
While the past few decades have witnessed notable regulatory reforms and rising investor activism, many boards remain inward-looking and resistant to true diversity. This insularity presents a critical challenge, particularly as companies face accelerating technological change, rising ESG expectations, and increasing pressure from shareholders, including minority investors, who demand accountability and fairness. The risks of closed boards are clear.
Homogeneous boards, whether in gender, age, professional background, or expertise, tend to reinforce familiar thinking and fail to provide robust oversight. McKinsey research shows that companies with truly diverse boards are 43% more likely to outperform financially.
Yet, in many companies, directors are handpicked, often at the CEO’s discretion, reinforcing echo chambers rather than fostering challenges, innovation, or critical oversight. Too many companies continue to appoint ‘trophy directors’, individuals chosen for prestige rather than performance, resulting in boards that look impressive on paper but fail to provide real oversight, strategic challenge, or independent judgement.
AI Related Risks and Strategic Decision-Making
What organizations truly need are effective directors who bring courage, expertise, and the willingness to question management, not just names that embellish annual reports. The danger is compounded when boards lack the emerging skills in technology and AI, leaving companies unprepared for the disruptions reshaping industries worldwide.
Boards dominated by insiders or CEO-appointed directors often struggle to act as independent monitors, weakening the governance framework that protects the interests of all shareholders, particularly minorities. Minority shareholders, who may not have influence in selecting leadership, rely on boards to ensure fair decision-making and safeguard against conflicts of interest.
When boards are handpicked and homogeneous, decisions may inadvertently favor insiders or dominant shareholders, undermining investor confidence and long-term corporate value. In contrast, boards that embrace true diversity, not just gender quotas but also diversity in professional experience, industry knowledge, geography, and emerging skills, are better positioned to balance competing interests, challenge management effectively, and protect the overall health of the company.
The gaps are particularly stark in emerging technological domains. Despite AI becoming central to business models, risk oversight, and strategic decision-making, boards are significantly underprepared.
Gartner reports that only 17% of boards globally include directors with technology expertise, and a MIT Sloan survey indicates that just 2% of Fortune 100 directors have direct experience in AI.
The World Economic Forum survey further highlights that 80% of boards feel unprepared to oversee AI-related risks. Fewer than 7% of boards have dedicated committees for AI, data ethics, or algorithmic governance, even as regulators across Europe, the U.S., and Asia tighten rules on digital oversight and accountability. Cybersecurity, too, remains underrepresented at the board level, with only 15–20% of boards globally including directors with relevant expertise, despite increasing incidents and the growing cost of cybercrime.
The positive news is that some countries are making meaningful strides toward more inclusive and capable boards. Norway, for instance, has championed diversity not only in gender but also in skills and expertise, advocating for directors with technology and AI literacy.
Switzerland and major European firms, including UBS and Stellantis, are actively nominating board members with deep technical and digital experience, signaling recognition that governance must evolve alongside innovation.
The Case for Mauritius as a Regional Hub
As a regional financial hub, Mauritius illustrates both the challenges and opportunities of this global trend. While its National Code of Corporate Governance encourages a balanced mix of executive, non-executive, and independent directors, board appointments in practice can still be influenced by close networks and familiarity, limiting independent oversight.
Minority shareholders in Mauritius, as elsewhere, depend on boards to ensure that corporate decisions serve the collective interest rather than just majority or promoter shareholders. Emerging initiatives such as director registries maintained by the Mauritius Institute of Directors and ongoing revisions to the governance code seek to expand access to diverse, skilled directors, including experts in AI, cybersecurity, and strategy. Yet the pace of adoption remains cautious, highlighting the need for both structural reform and cultural change.
True board diversity is more than a regulatory checkbox; it is a strategic necessity. Boards that are genuinely diverse, independent, and free from CEO handpicking can act as a counterbalance to executive power, safeguard minority shareholder rights, and ensure decisions reflect the long-term interests of the company.
Diversity brings multiple perspectives to bear on strategic choices, strengthens risk oversight, encourages innovation, and enhances credibility with investors, regulators, and the public. In a world where shareholder bases are widening and expectations for transparency and accountability are rising, boards that fail to embrace this shift risk strategic blind spots and reputational damage.
Road Ahead: A need to evolve and widen skills representation
In today’s world. Businesses face tougher challenges than ever, with rapid disruptions from technology, regulations, changing customer expectations and geopolitical uncertainty. Looking ahead to 2026 and beyond, boards must continue to evolve. They need to embed true independence, recruit for emerging expertise, and widen representation to include skills in AI, digital transformation, cybersecurity, ESG, and global strategy.
This evolution should be formalized through objective, merit-based selection processes and supported by continuous education to keep directors current on emerging risks and opportunities. By doing so, boards can transcend the closed-club model, aligning decisions with shareholder interests, including those of minorities and positioning companies for long-term resilience and growth.
In conclusion, the closed-club culture of boards is no longer compatible with the demands of modern governance. Companies that remain inward-looking, homogeneous, or reliant on CEO-driven appointments risk stagnation, conflict, and erode investor trust. Conversely, boards that embrace genuine diversity, independence, and expertise—while consciously protecting minority and shareholder interests—will be best equipped to navigate the technological, social, and regulatory complexities of 2026 and beyond. The challenge is clear: boards must open their doors not just to more people, but to the broader range of skills, perspectives, and insights that will define the next era of corporate success.
