As companies come under increasing scrutiny for their social and environmental impact, almost all of them are promoting initiatives designed to demonstrate their commitment, such as ethics committees, charters, ESG labels, and divestment pledges.
Governance seems to be changing, at least on paper. But in reality, many of these measures are criticized for being nothing more than cosmetic without any real desire for profound change. They are accused of giving the illusion of movement without actually changing power relations, practices, or the way decisions are made.
In this fourth article, we will explore the false solutions that, paradoxically (or logically?), are undermining corporate governance.
In short:
- Many companies are implementing ethical and CSR measures that are more about image than a genuine desire to transform governance practices.
- ESG tools and labels are often used for communication purposes, with no real impact on strategic decisions or the way decisions are made.
- Inclusion and participation initiatives are not generally accompanied by a redistribution of power, which limits their effect to consultation without any real influence.
- The proliferation of thematic committees with no clear mandate or decision-making power is a defensive strategy aimed at delaying action rather than taking it.
- This disconnect between words and actions fuels stakeholder mistrust and undermines the very legitimacy of corporate governance.
Measures that decorate more than they transform
In recent years, governance has equipped itself with an impressive arsenal to meet the growing expectations of stakeholders: CSR labels, ethics and diversity charters, climate policies, and engagement barometers.
The least we can say is that these elements tick as many boxes as possible, but it remains to be seen whether they have any impact on decision-making mechanisms, which is rarely the case or is not perceived as such, which amounts to much the same thing.
Take the classic example of diversity policies. A numerical target is set, an ad hoc committee is created, and training sessions are organized. But in reality, recruitment, promotion, and appointment processes vary little. The most important decisions continue to be the preserve of a small and fairly homogeneous circle.
The symbol is there, but governance remains unchanged or changes only marginally.
The smokescreen of ESG washing
With growing expectations around environmental, social, and governance (ESG) issues, many companies have been quick to respond. Not necessarily by revising their decisions, but by investing in their communications.
Climate commitments are made without a clear roadmap or real measurable follow-up, ESG scores are published without any alignment with variable executive compensation ([FR]Executive compensation: record amounts, opacity, and ESG absent), and sustainability reports are validated without governance serving as a strategic compass when setting priorities.
What was supposed to strengthen corporate responsibility is becoming a new ritual with no real roots in reality, and governance, which is supposed to be the place where trade-offs between constraints and ambitions are made, often sacrifices commitments on the altar of ambition.
Inclusion without redistribution of power
There is another strong trend: the emergence of so-called “open”, “participatory”, or “inclusive” forms of governance. This inclusion is often never accompanied by any form of power.
Of course, consultations with employees or stakeholders do exist, but they have virtually no decision-making power. Feedback is centralized, analyzed, and then filtered during the synthesis phase. Disagreement, however well-argued and constructive, has no seat at the table when decisions are made.
We talk about collective intelligence, but without creating the conditions for it to exist. We engage in co-construction without co-decision-making.
This gap between words and actions logically fuels a form of mistrust and cynicism, because the more it claims to listen, the more it exposes the limits of its integration mechanisms.
Committees for everything except decision-making
One of the most visible abuses is what some ironically refer to as “defensive comitology“. This refers to a governance abuse whereby committees are created as a knee-jerk response to complex or sensitive issues, not to make decisions, but to protect those in power.
For every issue, a committee is created: ethics, AI, climate, inclusion, innovation. But in most cases, these committees have no clear mandate or real impact. They produce opinions and reports, sometimes venture to make recommendations, but decisions are taken elsewhere, often without their output being read.
“If you want to bury a problem, appoint a commission“, said Clémenceau over a century ago. This well-known political maneuver has not failed to inspire the corporate world. These structures become buffer zones, decontamination chambers, shock absorbers whose purpose is to appease, buy time, and show that the issue is being addressed. But in doing so, we distance the subject from governance until it is eventually forgotten.
Governance reinforces mistrust instead of combating it
If the problem were the inefficiency of these mechanisms, it would be a lesser evil, as it would “suffice” to improve them, but the problem runs deeper and crystallizes the gap between words and actions.
Governance loves symbols but does not like to change its structure or its choices. In doing so, it feeds mistrust, and its predictability and formalism only fuel this feeling.
But by constantly reassuring without transforming, it weakens what it is supposed to embody: trust in the institution.
Bottom line
Effective governance is not measured by the number of reports or committees, but by its ability to provide clarity, draw conclusions from tensions, and make relevant decisions in uncertain situations.
By multiplying symbolic gestures, it runs the risk of becoming permanently disconnected from its stakeholders and from the interests of the business. This dissonance will not be corrected with a better communication plan, but with an overhaul of practices, trade-offs, and, necessarily, political courage in governance bodies.
In the next and final article, we will (finally) leave the confines of the present behind to try to envision a better future and ask ourselves, since this is the subject that inspired this series, whether artificial intelligence can transform corporate governance.
Can it help restore collective intelligence where it has disappeared? Can it strengthen the resilience of organizations without dehumanizing choices? Can it help leaders understand that with AI, so many obstacles are removed that it becomes possible to operate differently, provided we want to?
And above all: how can it serve governance… without replacing it?
In this series:
Image credit: Image generated by artificial intelligence via ChatGPT (OpenAI)
Related articles:
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Corporate governance: the word is trendy, but the reality is much less so
Why corporate governance fails despite good intentions
Corporate governance designed for yesterday and facing today’s challenges
Augmented governance: AI as a lever for collective lucidity
The digital enterprise : customer-focused, dreamy and poorly collaborative
