Board-level AI literacy as a missing governance capability: a pilot study of boards and executives

Corporate boards increasingly bear formal fiduciary responsibility for overseeing AI-driven strategic and sustainability decisions, yet their practical capacity to exercise such oversight substantively remains poorly documented. This study investigates whether a measurable AI governance capability gap exists between board-level and executive-level AI competence and examines the implications of this gap for the integrity of AI-driven ESG reporting. A pilot study ( n = 26) of board members and senior executives documents a statistically significant governance capability asymmetry. Board AI literacy (BAL: M = 2.50, SD = 1.29) is significantly lower than executive AI competence (EAC: M = 3.70, SD = 0.95; Mann–Whitney U = 32.5, p = 0.026, Cohen’s d = 1.06). Board-level AI auditing capacity (M = 1.79) and ethical AI oversight (M = 1.86) approach the measurement floor, indicating that functional human oversight mechanisms are largely absent at governance level. Executive AI competence is strongly associated with organizational AI strategic orientation ( ρ = 0.85, p = 0.002), consistent with a pattern in which AI-driven strategic transformation advances without commensurate board scrutiny. The findings suggest that boards may formally retain fiduciary responsibility for AI oversight while lacking the technical capability required to evaluate AI-generated strategic and sustainability outputs in an informed manner. In AI-driven ESG contexts, this capability deficit may increase the risk that sustainability disclosures are governed through formal endorsement rather than technically informed review. The study identifies board AI literacy as a missing governance capability in current corporate AI practice and offers preliminary empirical signals warranting larger-scale investigation of board-level AI oversight capacity.