Australian boards are entering 2026 at the intersection of uncertainty and transformation. Economic volatility, rapid technological change and a shifting global order are forcing directors to rethink strategy, governance and the very capabilities they need around the table.
In the year ahead, five forces will define the landscape — technology, demographics, geopolitics, ESG and capital flows. Each of these forces is interconnected, amplifying risk and opportunity.
Understanding how these forces intersect will be essential for boards seeking to make strategic decisions in a year likely to be as challenging as it is transformative.
“You could say 2026 is the first year of the new order,” says AMP Chief Economist and head of Investment Strategy Shane Oliver. “We’re still figuring out what it all means, but it’s going to be noisy and messy.”
1. Technology
AI and automation are reshaping markets and the way we live and work. Company directors need to leverage opportunities and be across the risks to ensure their organisations remain competitive.
“We are living in the midst of what could yet turn out to be a giant AI-driven stock market bubble,” says AICD Chief Economist Mark Thirwell GAICD. If it doesn’t pop this year, does that mean 2026 is going to be the year it pops? And if so, how does that play out? Is it going to be an orderly or a disorderly correction, and how do you navigate through that?”
Cybersecurity will persist as another major issue for boards. “It seems like not a month goes by without a cyberattack affecting the data security of a company’s customer group, which can obviously have a big reputational impact,” says Oliver.
“Companies must have systems in place to deal with it in order to minimise the disruption it can cause to the business generally.”
2. Demographics
Changing demographics such as an ageing workforce and talent shortages will likely shape board governance in 2026.
“Through the pandemic in particular and then into its aftermath, skilled labour and labour supply generally became a significant constraint,” says Thirwell. “It was right at the top of the issues boards had to be concerned about.
“While labour and skills shortages continue to be an issue, they are now less generalised than at their pandemic peak and more specific to certain sectors such as construction, where there’s a lot of underlying demand, plus an ambitious housing buildout agenda, an ongoing infrastructure rollout and a green energy transition all happening at the same time.”
His advice for directors is to be aware of how the context has changed in their operating environment.
“They must keep doing all the things they already do in terms of talent development, talent acquisition and talent retention,” he adds. “It is just that these forces increase the premium on getting that right.”
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3. Geopolitics
Geopolitics has become more of an issue over the past decade as the world has transitioned from being unipolar to multipolar.
“Following the end of the Cold War in 1991, the US was the global cop and there was general agreement that liberal democracies were the way to go,” says Oliver. “In the past 15 years, it’s really fragmented.
“The US has withdrawn to some degree from the global stage and other parts are in the ascendancy, particularly China. Others, such as Saudi Arabia, are seeking to fill the gap.”
He notes that while it is not necessarily a less stable world, it can lead to more geopolitical tensions flaring up — which has certainly been the case in recent times.
“How do you prepare for those shocks? Directors need to understand their organisation’s risks and vulnerabilities. If you’ve got that international risk hat on, ask yourself, do we understand our supply chains? Do we understand how diversified we are?”
4. ESG
ESG issues such as transition finance, greenwashing enforcement and climate litigation will shape 2026, according to KPMG experts.
“2026 will see the first wave of companies report on mandatory climate disclosures for the first time,” says Caron Sugars, a partner in KPMG’s Governance, Risk & Compliance Advisory and Board Advisory services. “This will really put the spotlight on company strategies and responses to climate impacts.
“There will be a lot of regulatory focus on these disclosures. We’re already seeing some companies adjust their net zero targets and climate change ambitions, aware of the risk of greenwashing.”
Any regulatory change or increase in stakeholder scrutiny brings with it new risks and opportunities, according to Tanya Kerkvliet, KPMG’s director of ESG, Climate Change & Sustainability. Boards must therefore balance ESG ambition with measurable performance.
“In the past five years, we saw companies rush to set sustainability targets like net zero emissions, but those targets are often far into the future and dependent on technological and societal outcomes still in development,” she says.
“We’ve found the most meaningful targets to be just the right balance between stretch and achievable. They are often shorter-term and focused on specific assets or components of the business. Interim milestones are transparent, so performance can be measured and tracked over time — as opposed to longer-term targets, where interim updates are often vague or esoteric.”
She warns that very few boards are proactively conducting governance reviews to understand whether the enterprise-wide governance framework is appropriate.
“This is the quickest way to achieve comfort on governance,” says Kerkvliet.
5. Capital flows
A private capital boom and retreat from public listings will be a key force shaping 2026, according to Stephen Hiscock, executive chair of SG Hiscock & Company.
“We believe the retreat in public listings is a concern,” he says. “They play an incredibly important role in raising capital in a transparent and liquid manner.”
He notes there has been a noticeable reduction both in the quantity of capital raised and the quality. There are several reasons for this, including the increased costs and complexities of listing on the ASX, as well as the drop in number of active investors when compared to the huge growth in index-style funds.
“There are still wonderful companies being created and they still need to raise equity and debt capital — and many of these companies are increasingly choosing to turn to private capital funding,” says Hiscock.
“There is so much private capital washing around the system looking for investment, so they see it as an easier and quicker path. However, investors need to remember the typical investment horizon for private capital investment is five to seven years before they can liquidate, so it is incredibly important investors understand the liquidity issue. And like listed markets, capital can dry up very quickly if market conditions change.”
Practical tips to help you prepare rather than react
“Boards can ensure they have the right governance, data, literacy and risk appetite for fast-paced change in technology by elevating those issues,” says AMP’s Shane Oliver. “Obviously, directors can’t be experts on all of these issues, so make people in the business responsible for them. You could form a subcommittee for ethics or AI and automation, and have them report back on a regular basis.”
“The wealth of materials to read through online about ESG can make it challenging to know where to start,” says KPMG’s Caron Sugars. “Sustainability standard setters such as the International Sustainability Standards Board have free subscription services providing regular email updates on the ESG regulatory landscape. There is also a range of ESG thought leaders on LinkedIn who post regular updates on the ESG landscape, in short-form text that’s easily digestible.”
“Companies need to understand all forms of potential capital flows and diversify their sources of capital as much as possible — and not just sources of equity capital, but also debt — banks, non-banks and private lending,” says Stephen Hiscock.
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