AI adoption in the public sector continues to grow, but cautiously, with communications use cases leading the push, according to a recent survey of public leaders by Diligent. By comparing Diligent’s 2024 survey results, we see trends that show that while adoption has increased, there is hesitation.

Key insights from the AI survey of public leaders

The survey surfaced several trends among public leaders:

57% have adopted AI to some extent in their organizations.

AI hesitation has grown to 37% compared to last year’s 16%.

Operational efficiency remains the primary realized benefit of AI.

Over half of respondents cite using AI for communications, the top use case.

The importance of ethical issues around AI has declined, while data and security remain top concerns.

AI adoption has grown, but so has hesitancy

In 2025, 57% of public sector organizations have adopted AI either in limited areas or throughout their organization (40% limited, 17% throughout), with a further 28% still considering adoption. This marks a small increase in widespread adoption compared to last year, when 52% had implemented AI in some capacity.

Meanwhile, the proportion of organizations undecided or resistant to AI has grown to 37% (28% are “thinking of doing so,” with 9% indicating “no and don't think we will”), compared to only 16% last year reporting no plans or uncertainty.

With AI having such a hold on for-profit enterprise, it’s noteworthy that adoption and consideration for the public sector continue to be more modest. However, given increased levels of hesitation indicated in other parts of the survey, it’s not unexpected. One respondent noted that their organization was “avoiding it as much as possible,” while another cited their biggest challenge as “ensuring that staff who haven't been approved to use AI are not using it.”

AI cautionary tales are gaining a greater foothold in the media, and public leaders should be aware of issues around results accuracy and sustainability. Thoughtful use of AI retains human oversight. Teams should pay careful attention to positive use cases to ensure they realize benefits for their staff and communities.

Communications claims over half of AI use

AI’s top use in 2025 amongst public sector organizations is for communications (52%), reflecting a continued emphasis on supporting routine messaging and administration. One respondent specifically noted using AI for “clarifying emails.” Routine task automation (28%) and chatbots (23%) also are cited, with a small but active segment also exploring data analysis and reporting and program evaluation. This trend broadly mirrors last year’s results, though “innovation” as a driver has moved down the list.

For public sector organizations, the time savings realized with AI-supported tasks — from generating meeting minutes and report summaries to producing data summations — can free up time for more strategic public service work.

Efficiency still reigns, but fewer report benefits

Organizations cite increased operational efficiency as the primary benefit of AI (46%), broadly in line with 2024's findings (50%). Notably, a significant 36% in 2025 say they are not using AI actively, suggesting that after initial excitement, the practical impact for many remains limited. “Enhanced customer experience” and “innovation” are considerably less prevalent as reported outcomes versus last year.

“Efficiency” remains the primary keyword around AI. For officials and staff who have rote tasks to accomplish through their workdays, it’s an obvious desired benefit. From transcribing meetings and generating minutes to processing survey results, AI tools speed work and move contributors to decision-making much faster. However, other survey answers shine a light on why more respondents aren’t realizing these benefits.

Privacy and security concerns stay high, while many simply resist change

Data privacy and security (43%) remain the top concern, just as in 2024. However, resistance to change (39%) and ethical/regulatory issues (34%) have increased sharply, surpassing concerns around integration and cost. Lack of skilled personnel (28%) is a persistent barrier. This points to more “human factors” challenging implementation as technical hurdles begin to subside.

 and refocus staff efforts. But as with any new solutions, representatives have special considerations. As one respondent notes,

“Cautious and well-planned adoption is key. Governments have a responsibility to be careful and cautious with who and how they share their data — even if it's just internally.”

Policy adoption still lags, inviting risk

Only 27% of organizations reported having formal AI policies or guidelines in 2025 — virtually unchanged from 2024 (28%), so the policy gap persists even as adoption increases. A striking 45% have no policy; nearly a third are unsure, underscoring confusion or lack of clarity about governance responsibilities.

As with all issues facing local governments, a lack of policy won’t defray risk. If your organization has yet to finalize your AI positions, the time is now to add it to your agenda and begin collecting research and 

A state- or national-level body may have sample policy materials to advance the discussion. That’s how several respondents started their policy efforts, while another notes that “our tech department director created a collaborative group with other school districts in our county.”

Limited ethics oversight: Stagnation or regression?

Efforts to address AI’s ethical implications have declined: 77% say their organizations haven’t meaningfully addressed responsible AI, compared to 56% reporting no ethics policy last year. Formal ethics training and committee formation remain rare (<15% combined showing surprisingly little progress despite heightened concerns).

Ethical issues related to AI use, from big-picture sustainability questions to the microcosm of copyright ownership, are 

 of how to best incorporate AI into school board and city council work.

Eighty percent of boards received no AI-focused training or education in 2025, up from 58% last year. While some organizations offer sporadic workshops or case studies, most have done little to prepare board members for AI oversight or use.

With its rapid changes and new use cases, AI shouldn’t be a “one and done” topic for training. It’s likely your technology partners are incorporating AI into their offerings, and residents, staff and students are finding new ways to problem-solve with these technology tools. Ensure new technologies are a regular item on the governing body’s agenda.

If they’re not already, discussions and decisions about AI use will be a regular part of the city’s or school board’s work. Diligent has developed frameworks for 

Diligent continues not just to monitor changing ideas around AI, but to find secure ways to incorporate best-in-class AI into our solutions for public facing boards.

Public leaders share their thoughts on AI

 Voting newswire. To register for a demonstration and trial of the product,

A car wreck waiting to happen. Radical and short sighted. An attempt to silence investors. Just some of the words used by shareholder groups reacting to recent comments from Securities and Exchange Commission (SEC) Chair Paul Atkins, who questioned the validity of precatory proposals under Rule 14a-8, which has governed them since 1942.

Atkins' October 9 keynote addressing the John L. Weinberg Center for Corporate Governance have sparked concern that the SEC could be stepping up efforts to narrow shareholders’ ability to raise issues through the proxy process. Atkins asked whether such resolutions should even be considered “a proper subject” and argued that “nothing has epitomized the politicization of shareholder meetings more than shareholder proposals focused on environmental and social issues.”

The topic has long been controversial, with five SEC legal bulletins since 2017, four of which have been rescinded.

However, Investor groups have argued that such a shift in policy could potentially usher in the biggest retreat in shareholder rights seen in decades.

"This is a car wreck waiting to happen," Danielle Fugere, president of As You Sow, told DMI. "We have seen time and time again what happens when you deregulate, when you remove all of the rules. It doesn't end well."





Atkins suggested that shareholders should not be entitled to draw their right to submit precatory proposals from Exchange Act Rule 14a-8 but should instead have to justify that right under Delaware state law or the company’s bylaws.

The remarks have widely been observed to serve as an open invitation to Delaware-incorporated companies to take the matter to the Delaware Supreme Court to seek confirmation that there is no wide-ranging right to submit shareholder proposals, with the SEC chair declaring his "high confidence that the SEC staff will honor this position."

And at a time when states are competing with Delaware to offer a more shareholder-friendly framework, Atkins’ speech could provide further incentive to create legal frameworks less friendly to precatory proposals. Indeed, in the same speech, Atkins cited recent legislation in Texas that would set the ownership threshold required to file shareholder proposals at $1 million or 3% of the outstanding stock.

However, moves to amplify the role of state law are seen by some as a backward step. "The call to defer to Delaware law and permit exclusion of precatory proposals would return corporate governance to a pre-Depression era of managerial dominance," warned veteran shareholder advocate James McRitchie.

Meanwhile, others have questioned the SEC's very mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. "At a time of growing unease about the condition and direction of the U.S. economy, Chair Atkins should be seeking to strengthen rather than undermine investor protections, particularly given his agency’s investor protection mandate," Interfaith Center on Corporate Responsibility (ICCR) CEO Josh Zinner, told DMI.

Proponents argue shareholder proposals provide a vital safety valve that allows investors to flag emerging risks before they escalate. Without them, they say, investors could turn to more combative measures such as “vote no” or withhold campaigns - steps that are generally more costly and more disruptive for companies. Proposals are also generally limited to reporting or target-setting, with requests that constitute micromanaging frequently excluded under existing processes.

"Since these resolutions are non-binding, it makes little sense to effectively ban them and deny investors the ability to pose a simple question," said Leslie Samuelrich, president of Green Century.





While Atkins has said he believes “a fundamental reassessment of Rule 14a-8 is in order,” investor groups insist that any changes must follow a transparent process.

“Certainly, the new chair may want to amend rules in some manner," said Fugere. "In that case, however, the agency must go through a public notice and comment process, where all stakeholders can have input on the proposed changes. That's how you make good laws."

For now, investors are being urged to make their voices heard. "In the weeks ahead, it is crucial for shareholders and their allies to speak out forcefully against this proposal to change 80 years of precedent supporting the rights of shareholders to file resolutions with companies, further weakening accountability at every level," said Zinner.

IN-DEPTH: Investors sound alarm as SEC chair floats new route to exclude proposals

Ready for the deal: Transaction readiness in turbulent times

, highlights a market navigating uncertainty with increased caution and deeper due diligence. Yet, a critical statistic suggests many companies are overlooking a key aspect of preparedness: only 4% have fully integrated their governance, risk, and compliance (GRC) with their financial systems.

This disconnect points to a larger issue. True readiness today extends beyond financial metrics to encompass a company’s operational resilience, long-term risk management, and cultural strength. The ability to manage these non-financial factors is a direct indicator of a company’s capacity to execute a successful transaction.

The report finds 40% of organizations are enhancing due diligence as a result of economic turbulence. In the current landscape, this diligence must assess a target’s holistic health. This includes operational risks like supply chain resilience, the strength of its corporate culture and employee morale, and the robustness of its compliance frameworks. A target that lacks control in these areas presents significant hidden liabilities that can impact valuation and post-deal integration.

Siloed GRC and financial systems can be a major red flag in a merger or acquisition because it shows a lack of ability to manage the broad set of data that defines a company's value and risk profile. When leaders prioritize “enhancing data quality,” they are speaking to the need for a unified view of performance. Acquirers now scrutinize a target’s environmental liabilities, social capital (like culture and employee relations), and governance structures. Companies that have mastered this can quickly respond to intense due diligence requests, demonstrating a level of operational discipline that builds confidence with partners and investors.

Successful integration demands cultural alignment

A significant challenge noted in the report is integrating new entities. Lasting success requires more than combining systems; it requires merging cultures and operational philosophies. Leaders must proactively plan for this cultural integration, ensuring shared values and practices to retain talent and achieve synergies. The best practice of using dedicated integration teams must be applied to these non-financial factors to ensure a smooth transition. 

The finding that only 42% of boards are deeply involved in transaction strategy reveals a gap. A board that provides rigorous oversight of material sustainability issues is inherently better equipped to guide a deal through today’s complexities by asking questions about long-term resilience: How durable is our business model? How strong is our talent pipeline? How adaptable are we to regulatory change? Asking tough questions about long-term resilience, not just short-term financials, is the mark of a transaction-ready leadership team. This broader perspective is essential for approving deals that create sustainable, not just immediate, value.

Transaction readiness is a measure of overall organizational health. The question for leaders is: Can we demonstrate strength not only in our financials but also in our operational integrity and cultural resilience?

As you assess your organization’s transaction readiness, evaluate your capability to manage and report on the full spectrum of social impact and sustainability governance factors. Building the systems and disciplines to manage this complete picture is the ultimate preparation for the opportunities and challenges ahead.

Beyond the balance sheet: The complete picture of transaction readiness 

GC Risk Index: GCs report heightened risks

A new survey of general counsel, chief compliance officers and audit leaders finds business risk on the rise in the third quarter, amid turbulent regulatory environment and tariff impact. 

Since the start of the year, geopolitical pressures have combined with trade negotiations and deregulation efforts to create heightened volatility for business. And as we begin the fourth quarter of the year, that instability shows little sign of improvement. 

Business risk is surging, according to legal and compliance leaders surveyed by Corporate Board Member as part of our Q3 Business Risk Index, which is a survey of general counsel, compliance leaders and audit members conducted in partnership with Diligent Institute. 

Legal and compliance chiefs are rating thel evel of risk in the current business environment at 7.9 out of 10, on a scale where 1 is Negligible and 10 is Significant. That number has been rising significantly since Q1, when business risk was rated just 5.8 out of 10––an increase of 36 percent since then.

Those polled say they find heightened risk amid the continued disruption of the Trump administration’s tariffs decisions, ongoing geopolitical conflicts and sticky inflation.

“The convergence of these factors keeps risk levels high and requires businesses to invest more in proactive compliance, risk management, scenario planning and governance frameworks,” says Taras Lytovchenko, the chief legal and compliance officer at Trinitex.

Many others who participated in the September survey echoed Lytovchenko’s sentiment, citing “tariff games by the administration” and “macroeconomic forces” as pertinent to this high-risk environment.

Interestingly, while the majority also cited the unpredictability of the regulatory environment as one of the top risks for business right now, that proportion is down 10 percentage points since last quarter. Kristy Grant-Hart, vice president and head of advisory services for Spark Compliance, a Diligent Brand, says companies may feel more prepared to navigate regulatory uncertainty thanks to proactive compliance measures and increased investment in monitoring and risk management.

“As organizations grow more confident in their regulatory frameworks, attention is turning toward more specific business risks like shifting tariffs and global volatility. This could reflect a positive trend in compliance maturity, where legal and compliance teams have built robust processes that allow them to respond to regulatory changes with more agility,” she says.

According to the survey, legal and compliance teams are indeed working to strengthen their companies’ ability to insulate themselves from these impacts and withstand a continuation of the uncertainty in the year ahead. Of the measures they are taking to do so, most list the increasing use of technology, including artificial intelligence, for monitoring and regulatory tracking purposes.

Overall, however, every aspect of compliance is being reinforced, including compliance/ethics training for employees and policy/procedural reviews. The only aspect not expected to increase in priority in the near term is “whistleblower or reporting channels,” which was flat year over year.

“Organizations leading the way in compliance are leveraging technology and procedural reviews not just to meet regulatory obligations but also to strengthen their overall risk posture,” says Grant-Hart. “When companies prioritize advanced compliance tools and ongoing risk assessments, they’re better equipped to anticipate regulatory changes and minimize exposure to emerging risks."

Respondents are divided in their management of geopolitical uncertainty—a divide that’s likely driven by their level of exposure to the turbulence of international trade and tariff stressors.

On one side, the data shows some companies have also been more proactive than others in creating a response plan early on: nearly one-third (27 percent) say they have either expanded their monitoring of cross-border trade or have consulted external advisors on global regulations.

On the other side, data shows43 percent are not changing their compliance priorities at all in response to increased geopolitical instability. This is unexpected—and alarming—as respondents ranked “geopolitical conflicts” as the third-most-pressing risk for business right now. True compliance resilience means actively reassessing policies and controls considering new global developments rather than waiting for risk to materialize. Proactive compliance planning enables organizations to adapt swiftly in an environment where regulatory expectations are constantly evolving.

When it comes to managing AI-related risks, the survey finds most legal and compliance teams have begun crafting some form of governing policies or usage guidelines: 29 percent say their company has a comprehensive plan for governing the use of AI, and another 38 percent say the guidelines are being drafted as we speak.

This ongoing process in a space that is rapidly evolving is perhaps why, though companies are increasing their efforts surrounding AI use, most say they are not “very confident” in their effectiveness: 44 percent report their policies need some refinement, while 33 percent say they are entirely insufficient.

This highlights the strain of AI adoption. While many companies feel an internal pressure to adopt these technologies for various uses, they are also adding complexity to the mix. Effective compliance in the AI era is about more than following the rules, Grant-Hart says, it’s about building transparency and trust in how these technologies are managed.

Legal chiefs’ lack of confidence in their ability to manage AI risk may also explain why directors remain hesitant about adopting such technologies for themselves. In Corporate Board Member’s 

, just 10 percent of directors surveyed said they use AI regularly for oversight purposes, and 32 percent don’t use it at all.

“This disconnect between thorough AI planning by compliance professionals and limited AI adoption at the board level points to the broader challenge of ensuring boards fully grasp both the risks and benefits of AI from a compliance perspective,” says Grant-Hart. “Bridging this gap takes ongoing board education and open dialogue, so directors are empowered to govern emerging technologies in alignment with sound compliance principles.”

Corporate Board Member, a division of Chief Executive Group, has been the market leader in board education for 20 years. The quarterly publication provides public company board members, CEOs, general counsel and corporate secretaries decision-making tools to address the wide range of corporate governance, risk oversight and shareholder engagement issues facing their boards. Corporate Board Member further extends its thought leadership through online resources, webinars, timely research, conferences and peer-driven roundtables. The company maintains the most comprehensive database of directors and officers of publicly traded companies listed with NYSE, NYSE Amex and Nasdaq.

Diligent Institute informs, educates, and connects leaders to champion modern governance. We provide original, cutting-edge research on the most pressing issues in corporate governance; certifications and educational programs that equip leaders with the knowledge and credentials needed to guide their organizations through existential challenges; networks that convene directors and corporate executives to share best practices and insights; and awards and recognition programs that celebrate the accomplishments of those who champion modern governance. Learn more at 

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Public leaders share their thoughts on AI

IN-DEPTH: Investors sound alarm as SEC chair floats new route to exclude proposals

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