Board committee structures and responsibilities continue to evolve as do communications about how the board is providing oversight in key areas.

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In brief

• Board committee structures and responsibilities continue to evolve as boards enhance their operations and sharpen the focus on technology and sustainability.
• While some boards added committees, more are expanding the purview of key committees to focus on topics such as cybersecurity, AI and climate.
• Committee structure should regularly be evaluated in the context of board operations and composition and the company’s changing oversight needs.

Technology and sustainability are key areas of strategic focus where boards are deepening their oversight at the committee level. Some large-cap boards have added technology or sustainability committees. Many others have expanded the oversight responsibilities of the three core committees generally required by US stock exchanges (audit, compensation, and nominating and governance) to include topics such as cybersecurity, artificial intelligence (AI), human capital management, climate-related matters and more.

To support boards as they consider the effectiveness of their committee structures and mandates in a changing business environment, this report explores related changes at S&P 500 company boards from 2021 to 2024.

Using company proxy statements, our analysis included a review of how committees were named and how their oversight responsibilities were described. Our findings reflect both an evolution of committee structure and responsibilities as well as enhanced communications around how boards are executing oversight of key areas of stakeholder interest.

Key Committee Responsibilities Expand

One approach boards are taking to strengthen oversight in key areas of strategy and risk is to broaden the purview of the three core committees — audit, compensation, and nominating and governance — to address technology and sustainability matters. These include cybersecurity, AI, climate and other environmental risks, human capital and culture (including diversity, equity and inclusion), and corporate political responsibility. For example, the percentage of companies mentioning environmental, social and governance (ESG) and sustainability in their audit committee descriptions has nearly quadrupled, from 6% in 2021 to 22% in 2024.

Cybersecurity oversight responsibilities have seen a slight increase among non-audit committees in recent years, but audit committees have experienced significantly more growth. Meanwhile, recent years have seen a trend of compensation committees renaming themselves to better represent their role in overseeing human capital. To see how topics in proxy statement descriptions of compensation committee responsibilities have changed, download the full report below. You can also read about how nominating and governance committees are taking the lead on sustainability oversight and which new committees are being added most often.

You can also read our 2022 report, How committees are evolving to meet changing oversight needs.

Summary

The business environment continues to evolve rapidly, particularly regarding emerging technologies (including the cybersecurity threat landscape), environmental sustainability and workforce transformation. A dynamic approach to governance is helping boards keep pace with these changes, including through evolving their committee responsibilities and structures to enable a deeper focus on changing business priorities and oversight needs.

The article was first published by EY.

Photo by Jan van der Wolf.