As boards convene for their first meetings of 2026, directors face a global landscape defined by competition and fragmentation.
At the World Economic Forum annual meeting, dialogue will centre on five critical themes: cooperation in a contested world; unlocking new sources of growth; investing in people; innovation at scale; and building prosperity within planetary boundaries.
The context is familiar to boards: artificial intelligence disruption, geopolitical risk and macroeconomic headwinds. We face a paradox where governance standards have never been higher, yet value creation remains elusive.
Are we using yesterday’s frameworks to address tomorrow’s challenges?
For the past few years, environmental, social and governance (ESG) metrics shaped boardroom discourse around the world. Today, ESG is under siege – politicised in some markets, diluted by greenwashing concerns in others, and reduced to compliance theatre in some parts.
The imperative to steward companies responsibly is more urgent than ever. Climate risks are financially material, stakeholder capitalism matters, and board quality must be enhanced. What boards need is a reframing that connects stewardship directly to value creation and strategic execution.
The evolution of ESG is about reconnecting value creation with values, rather than treating them as trade-offs. Call it ESG 2.0: Enterprise value, Skills and Growth.
Stock exchanges and regulators in several jurisdictions have identified “value creation” as central to the corporate governance excellence. But for too many companies, this is shorthand for stock price appreciation, divorced from fundamental questions about capital discipline.
Directors must shift their focus from equity value, which represents only shareholder claims, to enterprise value (market capitalisation plus debt minus cash).
Enterprise value captures the total value of the operating business. It strips away financial engineering, and represents the true value created by management’s strategic and operational decisions. You cannot game it by changing the debt-equity mix. It forces the right conversation: Are we building fundamental business value through better capital allocation and execution?
Economic value creation is best aligned through metrics such as economic value added or economic profit. Boards must ask: Are we truly creating value, or merely consuming capital? These metrics require companies to generate returns above their cost of capital, not just accounting profits – recognising returns in excess of opportunity costs.
We see this shift globally. Japanese corporate governance reforms urge companies to ensure return on invested capital exceeds weighted average cost of capital. Companies such as Hitachi responded by divesting low-return businesses and increasing capital returns; Toyota shifted from holding excessive cash to more disciplined capital allocation.
Enterprise value thinking ensures capital discipline. Boards must make tough decisions to divest underperforming assets and double down on value accretive strategies. Stewardship means balancing ambition with execution.
In an AI-driven world, skills are evolving faster than ever. WEF estimates 22% of jobs worldwide will change by 2030. Faced with growing services and knowledge economy globally, and tight labour markets, workforce transformation is existential.
Human capital governance is now a critical board responsibility. Just as boards oversee financial capital, they must now oversee human capital. This includes succession planning, culture stewardship and ensuring that the workforce is equipped for the jobs of tomorrow.
While companies obsess over hiring specialised talent, the greater risk is what happens to the majority of employees whose roles will change. Reskilling thousands of mid-career professionals is much harder than hiring dozens of specialists – and arguably even more critical to enterprise value.
Emerging skills for 2026 and beyond will span both hard and soft domains – from AI literacy and data ethics to ecosystem partnerships, learning agility and cross-cultural collaboration. Global leaders such as Amazon, Siemens and AT&T have committed billions to systemic long-term workforce reskilling.
Boards also need to serve as custodians of corporate culture. In the UK, nominated non-executive directors serve as employee engagement champions, bringing workforce insights into strategic discussions.
Even the governance nomenclature is evolving – remuneration committees are morphing into people and culture committees. Organisation culture determines whether transformation succeeds or stalls.
Stewardship means recognising that talent is a growth engine. Accounting treatment notwithstanding, human capital indeed is an asset. Skills are the new currency of resilience.
Boards face an evolving mandate: not just compliance, but performance; not just oversight, but foresight. Compliance is necessary, but performance and future-proofing are critical.
With the World Trade Organization projecting global GDP growth at 2.6% and trade expansion at 0.5%, macro tailwinds have disappeared. Growth now requires active board governance, and that means confronting geopolitics directly.
The question isn’t whether to pursue growth, but how to govern for it when the playing field is fragmenting. Semiconductor foundry TSMC’s response illustrates the new playbook: geographic diversification while maintaining core operations. This is a deliberate growth strategy designed for a new geopolitical reality.
Active geopolitical governance means scenario planning with teeth. Companies should ask: What happens if geopolitical tensions escalate? If regional unities fractures? If critical supply chains face weaponisation? For each scenario, what’s our pre-approved response? Boards that cannot answer these questions are not governing; they are spectating.
To unlock new sources of growth, boards should establish quarterly geopolitical reviews, create response playbooks with pre-approved capital allocation authority for scenario triggers, and systematically deploy board connectivity matrices, matching directors’ experience to strategic priorities.
Growth-oriented boards don’t just plan defensively. Stewardship in 2026 means boards leaning in to help companies expand, adapt and thrive. Progressive boards deploy relationship capital to open doors, support business development, forge ecosystem partnerships and spur innovation.
Rather than overstepping, this is how a board’s value extends beyond monitoring to active contribution.
The concerns of traditional ESG – climate and nature risks, societal considerations and governance excellence – continue to warrant boards’ attention.
However, ESG 2.0 – Enterprise value, Skills and Growth – connects directly to the value creation mandate regulators expect and stakeholders demand. Enterprise value focuses boards on disciplined capital allocation. Skills governance recognises human capital as a critical asset. Growth orientation shifts boards to active performance partnership with management.
As boards set priorities for 2026, ESG 2.0 provides a sharper framework for boards to navigate complexity, and offers a coherent approach to what directors should actually govern.
Boards must lean in. Investors must demand more than compliance. Executives must embed stewardship into daily decisions. And society must hold companies accountable not just for what they report, but for what they deliver.
If the traditional ESG led to ticking boxes, then ESG 2.0 must lead to thinking outside the box.
Boards that embrace ESG 2.0 will be better stewards – not just of shareholder value, but of societal resilience.
A version of this article appeared on the Business Times in Singapore on 15 January 2026.
