Geopolitical tensions, crumbling alliances, and the politicization of business are forcing executives and board members to rethink good corporate governance. The war in the Middle East and its uncertain course underscore the urgency. Nyenrode professor Jeroen Veldman makes the case for a Europe First strategy as a robust framework for the boardroom.
When Veldman delivered his inaugural lecture, Board Agenda 2035, in May 2024, the world looked entirely different: "The international response to Ukraine was united, and companies were grappling with the challenge of transitioning to a sustainable business model. Executives and supervisory board members were primarily wrestling with ESG reporting requirements and shareholder activism."
"It is important that Europe charts its own course. The key question is: what form of governance is good for Europe?"
Prof. Dr. Jeroen Veldman
Strategic autonomy
Two years later, national interests dominate in the United States, and corporate governance is becoming increasingly political. Alongside trade wars, tensions over Ukraine and Greenland are putting European security at risk. In response, Europe is working toward greater strategic autonomy, particularly in the areas of raw materials, defense, AI, and digital infrastructure, as advocated in the Draghi and Wennink reports.
The difficulty many companies face in switching to European digital services raises the question of how long it will take for those reports to translate into real change. Veldman: "It is important that Europe charts its own course. The key question is: what form of governance is good for Europe?"
Europe First: 3 pillars
He advocates for a Europe First strategy built on three pillars.
1. Market thinking vs. state influence
In a world where more and more countries are strategically deploying public resources in the private sector, clinging unconditionally to free trade is naive, Veldman argues. Europe would effectively be handing over its industry. "At the same time, it remains important to be critical of growing state influence, because an overly close entanglement of government and business can lead to high economic costs, unequal treatment in areas such as subsidies, and the improper use of protective structures."
2. Protecting European principles
According to Veldman, we must remain aware of and committed to the legal principles underpinning corporate governance: "That means core principles such as long-term value creation, the stakeholder approach, checks and balances, independent oversight, minority shareholder protection, judicial review, and a rational approach to the long-term consequences of externalities."
3. Strategic choices and new alliances
Europe should consider how to build new international alliances and ecosystems. Veldman: "This could include strengthened cooperation with countries that genuinely share a European vision of good governance."
These three pillars provide direction at a time when views on good governance are becoming increasingly intertwined with geopolitics. Pressure on the boardroom is mounting, driven by a range of fragmented developments. According to Veldman, three trends are important to recognize and anticipate.
Trend 1: A broader concept of risk
Social and economic developments - such as transitions around AI and ESG - have significantly broadened and deepened the concept of risk within corporate governance. The inclusion of the Risk Management Declaration (VOR) in the Dutch Corporate Governance Code reflects this shift. Recent legislation such as DORA, NIS2, and the AI Act shows how oversight - of data storage, for example - now extends well beyond the individual company.
And while global attention to ESG is waning, it remains relevant to risk assessment. Climate damage, for instance, is depleting international reinsurance pools, undermining the insurability of Dutch households and businesses. Executives and supervisory board members therefore face a growing number of new issues, long-term effects of business models, and expanding oversight across the entire value chain.
Trend 2: Geopolitical developments: politicization and regionalization
Geopolitical developments are forcing boardrooms to reorient. Traditional alliances are fraying, and companies must take a critical look at Russia, China, and the United States. The World Economic Forum's Global Risks Report warns that the greatest short-term risks are now geopolitical in nature. The question of who our friends are touches on supply chain responsibility and security of supply for raw materials, defense, ICT, and AI.
At the same time, calls for strategic autonomy and industrial policy have direct implications for procurement, subsidies, and the protection of strategic sectors, as well as for the tradability of shares, mergers and acquisitions, and relationships between companies.
More broadly, these calls are shaping the emphasis placed on the nationality of companies - and of executives and board members - particularly when it comes to appointments. That is why it remains important to scrutinize demands for strategic autonomy and industrial policy carefully.
Trend 3: Internal autocracy
Fundamental safeguards for good governance, such as the independence of board members, minority shareholder protection, and judicial oversight, are also coming under pressure in the United States.
One example is the backlash following a court ruling that blocked a multi-billion-dollar bonus payment to Elon Musk, on the grounds that the board lacked sufficient independent oversight. This prompted a widely publicized exodus of major companies from the state of Delaware.
Also concerning is the fact that ExxonMobil sued its own shareholders. In these moves toward more autocratic arrangements - granting unchecked power to boards and major shareholders - we can see how corporate governance principles are diverging between the US and Europe.
"The involvement and time commitment of supervisory board members will increase substantially."
Prof. Dr. Jeroen Veldman
Pressure on the Boardroom
All of these developments are placing pressure on the boardroom along several dimensions. The first question is what the growing demands on board members' time and specialized expertise will mean for the Dutch two-tier model, in which a supervisory board meets only a limited number of times per year.
Veldman expects a shift toward a one-and-a-half-tier board: "The Dutch separation between executives and non-executives would be maintained, but the involvement and time commitment of supervisory board members would increase substantially."
Concrete cases
The second question is how the new emphasis on nationality and regional interests will play out. The controversy surrounding the acquisition of Solvinity - the company that manages DigiD, the Dutch government's online authentication system - and the debate over Microsoft's role in suspending accounts belonging to the International Criminal Court illustrate how quickly strategic questions around digital infrastructure can take on a geopolitical dimension.
These debates about the nationality of companies show how corporate governance is rapidly becoming entangled with issues of regional identity, resilience, autonomy, political interests, and power dynamics.
European corporate governance as strategic resilience
The desire to build European counterpower and resilience raises the question of whether we are willing and able to view the European identity of corporate governance as a strength. This is not just about strengthening sectors. It is fundamentally about the values placed at the center of institution-building.
How are checks and balances arranged? How are stakeholder interests weighed? Are macro-level interests part of the fiduciary duties of executives and supervisory board members? What time horizon takes precedence?
In this context, Veldman calls for serious reflection on what it takes to withstand American pressure: "What are our own European values around corporate governance? What kind of social model do we want our companies to support? And has that been translated into a consistent governance framework? If we focus on that and hold firm to how we have organized this in Europe, a significant part of our resilience lies right there."
Cautious optimism
At the same time, he is cautiously optimistic. The way the European Union responded to the Greenland issue underscores that cooperation and institutional cohesion are possible. And in debates around pension funds, for example, he also sees the medium and long term remaining firmly in view.
His call is therefore both critical and constructive: "Think about where Europe's corporate governance models came from, and how that has given rise to a governance architecture that ensures checks and balances."
In a world where power politics is gaining ground, steadfast commitment to governance values may prove to be the most powerful form of resilience.
Prof. Dr. Jeroen Veldman is Professor of Corporate Governance at Nyenrode Business University, Academic Director of Nyenrode's board and governance programs, Chair of the Nyenrode Corporate Governance Institute, and an editor for the corporate governance section of the Journal of Business Ethics.
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