Board directors have a strong sense the economy is improving, amid rising concerns about shareholder activism, while other emerging risks go largely unchecked.
The annual Director Sentiment Survey, by the Institute of Directors (IoD) in association with ASB, indicates 55% of directors thought the economy would improve over the next 12 months, compared with 52% last year and 28% in 2023.
“This is the highest level of optimism about the prospects for the national economy that we have seen since the survey began in 2014,” IOD general manager Guy Beatson said.
“Despite the improved outlook, boards continue to prioritise cost control, cashflow and productivity, reflecting uncertainty about the pace of recover.
“Directors are planning for steady recovery rather than rapid growth, with resilience and operational discipline top of mind.”
ASB Chief Economist Nick Tuffley said the biggest shift was in the number of of directors expecting the economy to get worse at 18% compared with 28% last year.
“Most of those people have moved into the neutral camp,” Tuffley said, adding there were two factors driving the improving outlook.
“One is the lagging impact of past and future interest rate declines, which will increasingly support household spending, the housing market and, eventually, construction.
“The other is the good run of export incomes in some key industries, although the fruits of this are likely to be gradual in coming through and concentrated in particular regions rather than felt nationwide.”
Shareholder activism seen increasing
Another emerging concern was an increase in shareholder activism, which was expected to increase over the next two years.
Beatson said 44% expected activism to have a moderate or high impact on their boards.
“The expectation of shareholder or member activism differs sharply across organisation types,” Beatson said.
“Directors in local authorities (33%), Māori organisations (23%), and government organisations (21%) anticipate shareholder or member activism having a high impact on their boards over the next two years.
“By contrast, only 9% of large private companies, 8% of not-for-profits, 9% of small companies, and just 2% of publicly-listed company directors say the same.”
Beatson said the variation in concern suggested activism was viewed less as a market-driven risk and more as a stakeholder or political dynamic, especially in entities with strong public accountability or partnership obligations.
Risk management
Boards were increasingly confident in their risk management with 69 percent saying their systems were appropriate, though some issues, such as succession planning needed more attention.
“Some emerging risks may not be getting the attention they warrant,” Beatson said.
Only 46% of boards regularly reviewed physical climate risks, such as storms or floods.
Just 20% monitored modern slavery risks, and privacy oversight remained limited, with 57% of directors reviewing data-protection risks.
“It seems awareness is ahead of action at this point, in some of these more recent and fast-moving areas,” Beatson said.
The 2025 Director Sentiment Survey drew on 900 responses from directors representing a cross-section of organisations, while nearly half (46%) were the chairs.
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