What’s the Point of Corporate Governance If Boards Don’t Know Their Purpose?

Key Takeaways

• Governance Without Purpose: Many boards operate without a clearly defined purpose because there is no consensus on what corporate governance itself is fundamentally for.
• Conflicting Governance Models: Competing frameworks, shareholder value, stakeholder interests, and compliance oversight, create confusion about the board’s true role.
• Frameworks Fall Short: Leading governance codes like COSO, NACD, and even King IV rarely define the ultimate "why" behind governance, leaving purpose vague.
• Ambiguity Masks Accountability: Without a shared purpose, boards can avoid addressing mission-critical risks and strategic oversight responsibilities.
• Systemic Consequences: This lack of clarity contributes to governance failures that, according to Tim Leech, have cost stakeholders quadrillions of dollars globally.

Deep Dive

In this article, Tim Leech expands on a recent post he shared in the LinkedIn discussion group Objective Centric Risk & Uncertainty Management to explore a fundamental, and often overlooked, question in modern governance: Do boards actually agree on their purpose? Drawing on decades of research and a collaborative analysis with ChatGPT, Leech argues that the staggering cost of governance failures may stem from one core issue, there is no consensus on the very purpose of corporate governance itself.

Why the Absence of a Shared Governance Purpose Leaves Boards Drifting Without Direction

It’s a bold claim, but one rooted in over four decades of research, experience, and now, AI-powered analysis. Could the real root cause of governance failures (failures that have cost shareholders and stakeholders quadrillions of dollars globally) be as fundamental as the absence of agreement on the purpose of corporate governance itself?

That’s the question I recently posed to ChatGPT. And its answer? An unequivocal yes.

"Boards often lack a specific, agreed-upon purpose because the purpose of corporate governance itself is ill-defined, contested, or overly abstract.", ChatGPT said.

This insight strikes at the core of a long-standing dysfunction in boardrooms around the world. We have regulatory frameworks, codes of best practice, risk models, and accountability tools. But too often, what we don’t have is a shared understanding of why boards exist in the first place, what their core mandate should be.

Competing Theories, ConflictingSignals

At the heart of this problem is a fundamental lack of consensus. Is governance about:

• Minimizing agency costs between shareholders and management?
• Balancing stakeholder interests for long-term value creation?
• Ensuring compliance and oversight?

All of these definitions exist, and none of them dominate.The result is that boards are left to interpret their roles through different lenses, often defaulting to the path of least resistance: compliance checklists and narrow legal obligations.

The Silence of Governance Frameworks

Major frameworks (from COSO and NACD in the U.S. to the UKCorporate Governance Code and South Africa’s King IV) offer valuable principles. But very few take the bold step of articulating why governance matters in the first place. King IV makes perhaps the strongest attempt by referencing sustainable value creation, but even this stops short of anchoring board purpose in mission-critical objectives.

This omission is not just academic. Without a clear definition of governance purpose, board purpose becomes fuzzy, assumed, or implied. And in many cases, it’s simply ignored.

This ambiguity has real consequences:

• It enables boards to dodge the hardest questions, such as: Should they actively oversee risk tied to the organization’s mission and core objectives?
• If the answer is no, then what exactly is the board for?
• If the answer is yes, then boards must evolve into more active, aligned, and accountable bodies than many are currently structured to be.

This tension lies at the center of most major governance failures. From collapses in corporate culture to overlooked strategic risks, boards without a clearly defined purpose cannot effectively steward the organizations they serve.

Until There’s Agreement, Expect Drift

As ChatGPT rightly pointed out, “If corporate governance is everything, then board purpose risks being nothing.”

Unless regulators, frameworks, and boards themselves confront this lack of clarity head-on, governance will continue to suffer from ambiguity at the top.

The good news? The tools, frameworks, and now AI models are ready to help us tackle these questions. But the conversation must start with a simple, powerful query: What is the purpose of corporate governance, and what, therefore, is the purpose of the board?

Until we answer that, we will remain stuck in a cycle of reactive governance, failing to prevent the next wave of collapses that cost far more than we can afford.

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