State of Governance 2025

A test year for Europe

It will be an exciting year starting on January 20th. The world holds its breath.

Trump promised not to be a dictator, except on the first day. Nevertheless, he will use all available means "to make America great again". And Trump is not alone: he shares his unilateral vision of international relations with the "quartet of chaos": Russia, China, Iran and North Korea. Since the Russian invasion of Ukraine, they have intensified their cooperation.

They question the international order and believe in governance structures where relationships are transactional equations and... where the winner takes it all. In Europe, we are paralysed by uncertainties and the advancement of the far right opens doors. But we have the assets to mitigate the destructive effects of this ideology of power. We must of course protect our democracies from foreign interference.

Urgently, we must rebuild our industrial fabric and reduce our dependence. We must build on our values and strengths.

To become more resilient and competitive without compromising our democratic values, courage is needed: we must name and address things, we will have to work harder, and the energy transition costs money: we must factor this in. 75 years ago, Robert Schuman said: "World peace cannot be safeguarded without the making of creative efforts proportionate to the dangers which threaten it."

A year of Climate Solutions

The energy transition has begun, and Trump can slow it down but cannot stop it. China plans to produce nearly 60% of global renewable capacity by 2030. The United States has investedmassively, particularly in states that elected the new president. Those projects will not be undone without opposition.

Another important milestone was reached on January 9th, when the seven thousandth company committed to the "science based targets" initiative. In February, the deadline expires for States to update their climate action plans under the Paris Climate Agreement. In the accelerated energy transition, this 5-year update becomes crucial.

At the same time, climate justice is exploding. In the Shell case, the Court reaffirmed companies' obligation to reduce their emissions. While accepting on the one hand that there is no imminent violation of a legal obligation regarding scope 1 and scope 2, due to the large number of new climate laws. And considering on the other hand that the available scientific data is "insufficient" to force Shell to a precise reduction target regarding its scope 3.

Multiple other cases are pending. In the Vanuatu case, the islands in the Pacific Ocean threatened with disappearance, an opinion will be rendered by the International Court of Justice at the beginning of the year. This will have a significant impact. We must therefore not stow away our climate ambitions, quite the contrary. We can reduce a large part of emissions without incurring a competitive disadvantage. For the remaining 15%, we must accelerate technological and social solutions.

A bubble year?

2025 will also be a decisive year for artificial intelligence. Virtual employees are entering the workplace with tools to create your own AI agents.

Experts warn of the AI bubble bursting. Critical questions are being asked about it’s potential to really become profitable. A combination of artificial scarcity, creative reporting and endless cash burn reminds us of the dotcom bubble.

So it's now or never. As the new Generation Beta takes up the torch and, according to demographer McCrindle, will embrace technology and climate change.

But beware, while the United States risk a bubble and the SEC tackles AI washing, Europe finds itself at the back of the pack. Let's listen to Fabrice Brion, CEO of I-care, and create a "European Valley": a connected vision that brings together citizens' challenges and expectations, that marries tech, defence, education, business and markets.

Building business in 2025

We must thus implement our strengths to build solutions that respond to society's challenges.

To tackle this, we have defined 3 key elements: a message for the government, a celebration of governance and innovative governance for companies and their directors.

Less rules more corporate governance

My most important message this evening is not to mix up regulation, "hard law", and corporate governance, self-regulation and good practices.

Like the first Cadbury Code in ‘92, the Belgian governance codes are "principle based" and "comply or explain". They offer flexibility while guiding the company in organising its "checks & balances".

Abolishing good governance, as some advocate, leads either to Wild West situations or to more diverse rules. In the interest of efficient markets, codes should therefore not be abolished. They must be refined with a view to innovation and accountability.

However, the "check the box" mentality in corporate governance must be fought.

NO... comply or explain does not in itself incur costs, but its inappropriate application does.

What must business do?

Businesses must do what they are meant to: undertake, invest private capital to provide answers to society's challenges.

This also means not being afraid to innovate. Daring to win!!! As the Flemish Minister-President emphasised: we need more of a winner's mentality, confidence to face challenges head-on.

What must boards of directors do?

Innovative companies need innovative governance.

Every company must ask itself certain questions. Are the financing mechanisms sufficiently focused on the long term? Is the board of directors structured to support innovation? Are there sufficient insiders? Are diversity, culture and HR policy adapted?

This means re-evaluating delegations. How do we define control? Are our checks & balances adapted to this more risky environment? Have we planned to review the governance structure, as recommended by the 2020 Code?

However resilient the structures, you cannot possibly foresee everything. That's why purpose and values are crucial. They provide a framework against which decisions can be tested, also within the context of increasing emphasis on ethical behaviour.

Starting from the company's interest, define risk appetite. This will ensure that board discussions are neither too defensive nor too aggressive. Then, despite the short-term world, stay engaged in a long-term strategy. Know that short-term pressure is sometimes perception rather than reality. Strategic planning must therefore be approached constantly but with a long-term vision.

All this demands more and more from executive and non-executive directors. If directors' commitment becomes increasingly important, in terms of dedication, time investment and expertise, remuneration must be matching. The recent GUBERNA benchmark confirms that this is not always the case yet, except for small companies.

Make intelligence strategic

And last but not least: to make strategy intelligent, make intelligence strategic. Good decisions can only be made with fast but accurate data. Invest in your data management. Organise effective monitoring of the use and implementation of AI and technology.

Directors, participate in the "AI for the board" programme that we are launching on 28 February, a programme designed for the board of directors to help the company move forward.