The global economy is undergoing major transformation as artificial intelligence (AI) filters into almost every industry – reshaping business models^[1] and investment decisions.

For those who sit on a company’s board, setting overall strategy and holding management to account, the shift is raising the bar on what’s required. Board members need to understand the new technology they’re investing in. They must also be equipped to oversee complex technological risks.

Given this, you’d expect to see large companies stacking their boards with directors who have science, technology, engineering and maths (STEM) expertise. But that isn’t the case.

Our new research^[2] shows that at the largest 500 listed companies in Australia, many boards lack members with sufficient technological expertise. More than half had no directors with STEM expertise on their board.

Here’s why that’s a problem – and why all of us have a stake in fixing it.

What we found

We examined^[3] the backgrounds and expertise of directors from the largest 500 firms listed on the Australian Securities Exchange (ASX) and compared board composition in 2007 to 2022.

We were interested in whether the number of directors with STEM expertise had increased to match the significant technological advancements that had taken place over that time.

We were surprised by the results.

We found the backgrounds and expertise of directors from Australia’s largest firms changed very little over 15 years. Directors with STEM expertise remained underrepresented on boards, increasing from 8% to just 13% over the period.

By comparison, directors with backgrounds in the traditional fields of accounting, banking and law occupied 42% of board seats (up from 40% in 2007). Directors with “C-suite” experience – roles such as chief executive officer, chief financial officer and so on – made up 35% of all board positions in 2022.

Even in industries with a scientific focus, such as technology and health care, we found accountants and bankers still outnumbered directors with STEM expertise.

Our study only goes up to 2022, when AI was relatively new on the scene. But newer data suggest the picture hasn’t changed much^[4].

The 2025 Watermark Search International Board Diversity Index^[5] (which covers the largest 300 companies on the ASX) paints a similar picture. Directors with expertise in accounting, financial, legal or general management backgrounds still dominated boards (75%).

Why is this a problem?

Research^[7] shows corporate strategy and investment decisions are shaped by the backgrounds and characteristics of the top management team – including board members.

Our research^[8] makes a clear case for getting more STEM expertise into the boardroom. We found companies with greater STEM representation on their boards invested more in innovation and investors valued them more highly.

This aligns with other research^[9], which shows “innovativeness” is linked to better company performance, growth and survival.

STEM expertise becomes even more valuable in low-tech industries or companies where the chief executive doesn’t have a STEM background. Here, a director can step in to provide technical expertise and fill critical gaps in innovation strategy and capabilities.

Australia is falling behind

On innovation more broadly, Australia is falling behind^[10] many of its peers. A recent independent report^[11] the federal government commissioned found Australia’s research and innovation system was “broken” and needed significant reform.

But Australia still wants to be an innovation leader. This week, the federal government and global AI giant Anthropic signed a memorandum of understanding^[12], backing plans to expand Australia’s AI infrastructure and attract big tech to Australia. Anthropic has previously announced it will open an office in Sydney^[13] this year.

At the same time, data centre operators are attracting high-profile investors^[14] and billions in investment.

There is clearly a strong appetite to invest in innovation and Australian firms that are willing to embrace it. The question is whether boards are adequately equipped to make the most of this momentum.