Narrative contradictions are the next big corporate governance risk
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It has never been easier to gather information about a company through disclosures, regulatory filings, statements, commitments, internal communications and brand campaigns.
- But what happens when there's even the smallest discrepancy in what a company is saying and what it's doing?
Why it matters: Narrative inconsistencies are not just PR glitches, they are the next big governance risk.
State of play: Regulators, investors and courts are beginning to treat narrative contradictions — statements that are true on their own but irreconcilable across disclosures — as actionable governance failures, says Craig Carroll, founder of the Observatory on Corporate Reputation.
- For example, Boeing's 737 MAX crisis highlighted the disconnect between internal communications and engineer warnings with public assurances and protocols.
- On a less severe scale, Bud Light's marketing misalignment caused consumer confusion, long-lasting boycotts and a sinking stock price.
- It could also show up across markets, with ESG marketing in Europe that isn't reflected in SEC filings.
The big picture: PwC surveyed over 600 public company directors and found that 21% believe there is a lack of the necessary expertise for today's board roles.
- Board appointments still largely focus on traditional expertise across finance, operations and industry knowledge.
- Only 32% of executives believe their boards have the right expertise.
Between the lines: Corporate boards face potential fiduciary exposure if they ignore narrative gaps and CCOs who can manage contradictions become indispensable to the board.
Yes, but: As companies grow, evolve and adapt to the current environment, their commitments or scope of work change, which leads to contradictions in the corporate narrative.
- Most recently, this has taken the form of DEI or ESG walkbacks.
- It is up to the communications team to identify and reconcile these changes in language and strategy.
What's next: AI integration is bound to lead to several narrative discrepancies across businesses, such as gaps between public ESG commitments and operational realities.
The bottom line: If you don't govern the story, the story will govern you.
- "CCOs are uniquely positioned to detect, to compile and reconcile contradictions before they blow up, turning liabilities into governance signals," Carroll says.
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