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Effective Leadership

Is your board prepared for the next leadership challenge?

ESG, SRI, Research Paper, Jules Bardy, Cemre Aksu

Is your board prepared for the next leadership challenge?

Leadership transitions can affect strategy execution, organisational stability, investor confidence and long-term value creation. Yet effective leadership governance goes beyond selecting the right CEO today. Boards also need to anticipate the leadership capabilities their company will require for its next strategic phase.

Executive Summary  

Leadership fit is a governance issue

Recently, several difficult CEO transitions have revealed that leadership should be treated as a forward-looking governance risk rather than a one-off appointment or HR process. This paper introduces the concept of a leadership mandate, connecting strategy, culture, human capital and risk with clear expectations for executive leadership. Drawing on Candriam’s engagement with 26 companies that experienced CEO changes between 2020 and 2025, it explores how succession planning, culture, human capital and board accountability can provide investors with a more substantive view of leadership preparedness.

 

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Jules Bardy, Cemre Aksu
ESG Analyst – Governance Specialist, Engagement & Voting, Lead Proxy Voting Analyst
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The board’s responsibility is not simply to appoint the right CEO today, but to ensure that the company has the right leadership for the period ahead.”  

Key takeaways 

  • Succession should start before a vacancy exists. Mature boards treat it as an ongoing governance responsibility, supported by emergency planning and longer-term leadership development.
  • Boards need visibility beyond the CEO. Direct knowledge of internal talent helps directors assess pipeline depth and challenge assumptions about candidate readiness.
  • Leadership assessment needs to consider both “what” and “how”. Financial results matter, but behaviours, culture and organisational consequences provide additional evidence of leadership effectiveness.
  • Human capital can reveal leadership and transition risk. Retention, engagement, management stability and other indicators can help boards understand organisational health.
  • Accountability ultimately rests with the board. Effective governance requires the ability to anticipate, select, support, assess and, where necessary, intervene.
RESEARCH PAPER

Download the paper

How can investors distinguish substantive leadership governance from generic disclosure? Download the research paper to explore Candriam’s engagement findings and framework for assessing succession preparedness, leadership effectiveness and board accountability.

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