Levels of AI oversight on boards are growing year on year - but not fast enough.
A new study has found that almost one third of companies in the S&P 500 disclosed board oversight of AI. We believe this still isn't high enough.
At first glance, it appears that major companies have become far more aware of the need to incorporate AI oversight into their corporate structure over the past few years. A recently published ISS Corporate report found that the number of S&P 500 companies disclosing some level of board oversight or AI competency in their proxy statements rose 84% from 2023 and 2024, and over 150% from 2022 to 2024.
The study also found that 31.6% of S&P 500 companies had disclosed board oversight of AI in 2024 - that oversight could include specific committees with oversight responsibility, director(s) with AI expertise, and/or an AI ethics board.
These increases in oversight were seen across all industries, not just the technology sector, reflecting the breadth of impact AI has had. In particular, the increasing importance of AI in industries such as healthcare and communication was reflected in their high levels of reported oversight.
Despite this, we believe that the amount of AI expertise on top boards remains too low. Only 20% of the companies surveyed disclosed having at least one director with AI expertise - this is almost double the 11% figure from 2022, but still far below what boards need to face up to the challenges of AI. Full board or committee oversight of AI also remained uncommon, at just 11% of S&P 500 companies.
Indeed, the evidence of increasing shareholder concern over AI only emphasises the need for boards to increase their expertise and oversight. The ISS report found a significant rise in shareholder proposals centered on AI. The majority of these proposals "called for third-party evaluation reports and impact assessments," reflecting urgent concerns over "access to information" and "profitability of AI initiatives after massive investments".
If boards lack the sufficient AI expertise to respond to a rapidly changing environment, they may quickly find themselves out of step with the attitudes and demands of their shareholders.
In a business landscape undergoing rapid transformation in the face of AI, these increases in expertise are promising, but do not go far enough to keep pace. It is up to boards and AI professionals to redress that defecit.
You can read the full text of the ISS report at: