ECBE Governance Perspectives 2025 - The Board of the Future

Findings from a Multidimensional Assessment of Supervisory Board Work in Germany – ECBE Study Board of the Future 2024/25

The role of the Supervisory Board has undergone significant changes in recent years and is more complex than ever. Technological advancements, geopolitical risks, societal value shifts, and increasing regulatory requirements demand a new, forward-looking approach. Modern Supervisory Boards require a redefined understanding of their role and a comprehensive knowledge of disruptive business models. Additionally, they must proactively identify risks and navigate confidently in a dynamic and diverse environment.

This is highlighted in the latest edition of the Board of the Future study by the European Center for Board Effectiveness (ECBE), a subsidiary of the corporate governance-focused consulting firm Mercer | hkp///group. The analysis provides in-depth insights into the current developments and challenges facing Supervisory Boards.

The study's findings are based on a data analysis of Supervisory Boards within the DAX index family (DAX, MDAX, SDAX), as well as an evaluation of annual reports using text analysis and language models. These insights are further complemented by results from board evaluations conducted by ECBE Advisors and individual discussions with Supervisory Board and committee chairs.

Supervisory Board Activities Between Routine and Continuous Change

"The understanding of the Supervisory Board’s role has undergone a significant transformation in recent years. In addition to its traditional oversight function, strategic and transformative responsibilities are increasingly coming into focus—shaped by the challenges of the pandemic, war, and economic and societal dynamics. Striking this balance requires not only the right qualifications but also efficient structures, processes, and decisive leadership. A trusting collaboration with the Executive Board and a well-aligned role perception are essential prerequisites," explains Dr. Lukas Berger, ECBE Director and lead author of the study.

Regine Siepmann, Partner at Mercer | hkp///group, adds with a particular focus on the role of the Chair of the Supervisory Board: "Supervisory Board Chairs play a pivotal role in fostering effective and trusting collaboration, ensuring positive team dynamics, and optimizing the use of the competencies of Supervisory Board members. Through their integrative leadership, support of committee chairs, and facilitation of cooperation between the Supervisory Board and the Executive Board, they influence not only the quality of oversight and control but also the strategic direction of the company," says the Corporate Governance expert.

The Supervisory Board of the Future in Light of the Study’s Findings

Expansion of the Role Understanding Required

Over the past year, Supervisory Boards have focused not only on their oversight responsibilities but also on the implications of the pandemic and war, digitalization, sustainability, and corporate strategy during their meetings. To meet future challenges, they must continue to strike a balance between monitoring core business activities and fostering innovation and new business models. Achieving this requires the establishment of efficient processes, structures, and routines.

Leadership Role of the Supervisory Board Chair is Crucial

Supervisory Board Chairs must strike a balance between active leadership, integration, and fostering individual accountability within the board. Going forward, the Chair will need to further enhance their ability to shape team dynamics, support committee chairs, and facilitate collaboration with the Executive Board.

Diverse Competency Profile and Increased Flexibility

A long-term succession plan based on clearly defined competency profiles is still often inadequately implemented. German Supervisory Boards are still considered too formal and inflexible. This brings the Nomination Committee into focus, as it is responsible for identifying competency gaps early and ensuring a well-qualified and diverse composition of the Supervisory Board. Staggered and varying term lengths for board members are becoming the norm. While the proportion of women continues to rise, the international diversity of boards remains limited.

Focused Expertise and Transparency in Committee Work

In Supervisory Board activities, committees enable in-depth discussions on specific topics that often cannot be sufficiently addressed in plenary meetings. With clear task allocation, structured coordination, and transparent reporting to the full board, overlaps, gaps in processing, and information asymmetries among Supervisory Board members can be avoided.

More Than Ever: Transformation, ESG, and AI in Focus

The number of transformation committees, particularly ESG committees, continues to grow, while these topics are increasingly viewed as cross-functional responsibilities from strategic, regulatory, and risk-based perspectives. Close collaboration between the plenary and committees is essential. Supervisory Boards must interpret global influences and proactively address both the opportunities and risks of artificial intelligence. Additionally, cybersecurity should be established as a strategic core topic and remain a regular item on the agenda.

Compensation & Investor Communication

Higher demands and increasing time commitments are leading to an increase in Supervisory Board compensation, accompanied by a simplification of compensation systems. Some companies have introduced stock ownership requirements to strengthen the link to performance. In Executive Board compensation, sustainability goals continue to be integrated by the Supervisory Board. Pay for performance remains essential, with transparency playing a crucial role in building investor trust. Investors are increasingly seeking dialogue with Supervisory Board Chairs on these matters as well.