The Federal Aviation Administration on Friday urged U.S. aircraft operators to “exercise caution” when flying over the eastern Pacific Ocean near Mexico, Central America and parts of South America, citing “military activities” and possible satellite navigation interference.

For corporate boards, the shift signals something more fundamental: governance is increasingly being interpreted not just by people, but by machines. And most boards have not yet fully reckoned with what that means.

Why Proxy Advisors Became So Powerful

Proxy advisory firms did not set out to become power brokers. They emerged to solve practical problems of scale and coordination.

As institutional investors came to own shares in thousands of companies, proxy voting expanded dramatically, covering everything from director elections and executive compensation to mergers and an array of shareholder proposals. Voting responsibly across that universe required time, expertise, and infrastructure that many firms did not have.

Proxy advisors filled that gap by aggregating data, analyzing disclosures, and offering voting recommendations. Over time, a small number of firms came to dominate the market. Their influence grew not because investors were required to follow them, but because alignment was efficient, defensible, and auditable.

Just as important, proxy advisors addressed a coordination problem that had left shareholders effectively voiceless. Their intellectual roots lie with activists such as Robert Monks, who believed dispersed ownership had allowed corporate power to become insulated from challenge. The aim was not to automate voting, but to help shareholders act collectively; to deliver uncomfortable truths to management that might otherwise never reach the top. Over time, however, the mechanisms built to carry that judgment increasingly substituted for it, as scale, standardization, and efficiency crowded out confrontation.

What began as a method to coordinate shareholder judgment increasingly became, in practice, a substitute for it.

Why the Model Is Changing

The forces that allowed proxy advisors to scale also exposed the tension between efficiency and judgment.

Standardized policies brought consistency, but often at the expense of context. Complex governance decisions, CEO succession timing, strategic trade-offs, board refreshment, were increasingly reduced to binary outcomes. Political and regulatory scrutiny intensified. And asset managers began asking a fundamental question: if proxy voting is a core fiduciary responsibility, why is so much judgment outsourced?

The result has been a gradual reconfiguration. Proxy advisors are moving away from one-size-fits-all recommendations. Large investors are building internal stewardship capabilities. And now, artificial intelligence has entered the picture.

What AI Changes, and What It Doesn’t

AI promises what proxy advisors once did: scale, consistency, and speed. Systems are designed to process thousands of meetings, filings, and disclosures efficiently.

But AI does not eliminate judgment. It relocates it.

Judgment now lives upstream, in model design, training data, variable weighting, and override protocols. Those choices are no less consequential than a proxy advisor’s voting policy. They are simply less visible.

Where proxy advisors once aggregated shareholder voice to challenge managerial power, AI risks making that challenge quieter, cleaner, and harder to trace.

For boards, this changes the audience for governance disclosures. It is no longer only human analysts reading between the lines. Increasingly, it is algorithms reading literally, historically, and without context, unless boards provide that context themselves.

The Governance Questions Boards Haven’t Been Asking

This shift raises a set of questions many boards have not yet fully engaged.

How are we being assessed? AI systems can draw from filings, earnings calls, websites, media coverage, and other public sources. Governance signals now accumulate continuously, not just during proxy season.

Where could we be misread? Language that works for human readers: nuance, discretion, evolving commitments, can confuse machines. Ambiguity may be interpreted as inconsistency. Silence can be read as risk.

And when something goes wrong, who is accountable? There is no universal appeals process for AI-informed proxy votes. Responsibility may ultimately rest with the asset manager, but escalation paths may be opaque, informal, or slow, particularly for routine votes.

Boards should assume that if an algorithm misinterprets their governance, there may be no analyst to call and no clear way to correct the record before a vote is cast.

Consider This Scenario

A company’s board chair shares a name with a former executive at another firm who was involved in a governance controversy several years earlier. An AI system scanning public information associates the controversy with the wrong individual, quietly elevating perceived governance risk ahead of director elections.

At the same time, the board delays CEO succession by a year to preserve stability during a major acquisition. The decision is thoughtful and intentional, but the rationale is scattered across filings, earnings calls, and investor conversations. The AI system flags the delay as a governance weakness.

Days before the annual meeting, a third-party blog posts speculative criticism of board independence. The claims are unfounded but public. The AI system ingests the content before any human review occurs.

The board never sees the errors. There is no analyst to engage, only a voting outcome to react to after the fact.

None of this requires bad actors or malicious intent. It is simply what happens when scale, automation, and ambiguity intersect.

What Boards Can, and Cannot, Do

Boards cannot control how asset managers design their AI systems. Nor should they try to optimize disclosures for algorithms.

But boards can govern differently.

Some boards are already experimenting with clearer narrative disclosures including more explicit explanations of governance philosophy, how trade-offs are made, and how judgment is exercised. Not because algorithms “care,” but because humans still design, supervise, and sometimes override these systems.

Clarity reduces the risk of misinterpretation. Consistency lowers the cost of human review. Context makes it easier for judgment to survive automation.

This does not mean boards should explain every decision publicly or eliminate discretion. Over-disclosure carries its own risks. But it does mean being deliberate about which judgments require context to be understood, and which cannot safely be left to inference.

Boards should also rethink engagement. Conversations with investors can no longer focus solely on policies and outcomes. They should include questions about process: where human judgment enters, what triggers review, how factual disputes are handled, and how quickly errors can be corrected.

This is not about mastering AI. It is about understanding where accountability lives when governance decisions are mediated by machines.

Governance in an Algorithmic Age

In an AI-assisted voting environment, some familiar assumptions no longer hold.

Silence is rarely neutral. Ambiguity is rarely benign. And consistency, across time, across platforms, across disclosures, will become a governance asset.

The shift matters now because proxy voting outcomes are increasingly shaped before boards realize a conversation needs to happen.

The boards that navigate this transition best will not be those optimizing for scores or checklists. They will be the boards that document judgment, explain trade-offs, and tell a coherent governance story that holds up whether it is read by a human analyst, a proxy advisor, or a machine.

That is not a technology challenge.

It is a governance one.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

The prize is great on paper for a real estate tycoon like Trump—after all, Greenland would exceed the Louisiana Purchase as the largest geographic acquisition in U.S. history. But multiple specialists in the region and its resources dismiss the economic reasoning as nonsensical, given that Greenland already is open to greater U.S. investment and military scale-up.

Greenland may be home to large reserves of critical minerals and crude oil, but they’re much cheaper to extract elsewhere in the world, including within the Lower 48, said Otto Svendsen, associate fellow specializing in the Arctic for the Center for Strategic and International Studies.

“The business case is non-existent, setting aside all the political and legal and practical reasons for why I think it’s impossible,” Svendsen told Fortune.

The White House’s own estimations place the cost of a purchase of Greenland close to $700 billion, he said. Then there are the hundreds of billions of dollars needed to fund the developments of mines, oil drilling, roads, electrification, ports, and more—with a wait of 10 to 20 years before seeing any notable commercial success. The U.S. would also presumably assume Denmark’s roughly $700 million in annual subsidies in perpetuity to pay for the education, health care, and more of Greenland’s 56,000 residents.

“The numbers just don’t add up at all,” Svendsen said. “It cannot be hammered home enough that the U.S. has an incredibly favorable arrangement at the moment with an incredible amount of access to Greenlandic territory, both to advance its security and its economic interests.”

Despite ample efforts over the years to develop mines and drill for oil—the last, unsuccessful drilling bid was abandoned in 2011—Greenland today is home to zero oil production and just two active mines, neither of which extract the desired rare earths essential to computer, automotive, and military defense equipment. There’s a small gold mine and another for anorthosite—a mineral used to produce fiberglass, paint, and other common materials. While some rare earths and oil projects are in development—by U.S. companies—they remain in early stages, with no guarantees of success.

The relative lack of success over decades is no fluke, said Malte Humpert, senior fellow and founder of The Arctic Institute nonprofit think tank.

“You’re dealing with ice, polar bears, darkness, lack of power, the sea ice being frozen, really low temperatures. It’s probably one of the roughest places on Earth,” Humpert said. “The fact that it hasn’t been done—when it could have been done—is really all you need to know. It’s very difficult to make it economical.”

None of this has publicly deterred the president, nor has the risk of shattering international laws and the NATO alliance. The White House describes owning Greenland as a national security imperative—a rationale that might outweigh the poor economics of an annexation. But analysts say existing treaties give the U.S. all the needed military advantages in the Arctic with the potential to grow and negotiate for even more.

As Trump focuses on his new “Donroe” doctrine and forewarns of a blitz through much of the Western Hemisphere—since launching a military strike in Venezuela this month, he’s threatened Colombia, Cuba, and Mexico—he has set his sights on annexing Greenland by any means necessary, through a purchase or military action.

“We are going to do something on Greenland whether they like it or not,” Trump told reporters last week. “I would like to make a deal and do it the easy way. But, if we don’t make a deal, we’re going to do it the hard way.”

While Trump publicly mulls seizing Greenland by force, Secretary of State Marco Rubio has focused on a negotiated purchase, which is a type of international diplomacy not practiced since World War II, and an approach that Denmark and Greenland have repeatedly rejected. The White House did not immediately respond to a request for additional comment.

The Trump administration already is planning a large upgrade of its only military base in Greenland, the Pituffik Space Base, with the potential to expand much more.

So why not just continue to grow your existing U.S. footprint in Greenland? If the U.S. doesn’t annex Greenland, then Russia or China will instead, Trump has insisted. “When we own it, we defend it,” the former real estate developer said. “You don’t defend leases the same way. You have to own it.”

What’s at stake

After Trump initiated tariffs and trade wars last year, the United States’ over-reliance on China for critical minerals—especially rare earths—became painfully apparent when China threatened to withhold the necessary soft metals that drive America’s economy and help bolster its national security.

The oxymoron of rare earths is that they’re abundant around the world, but harder to find in larger concentrations that make the economics worthwhile. Greenland theoretically offers those large concentrations.

Greenland’s estimated rare earths reserves offer a smorgasbord of 1.5 million metric tons, including the more uncommon heavy rare earths. That would rank Greenland eighth worldwide, coincidentally just behind the United States, but well behind China and its 44 million tons, according to the U.S. Geological Survey.

But as the research firm Wood Mackenzie says in a new report, “Here, ambition runs up against reality. Around 80% of the island is covered by the Greenland Ice Sheet, averaging a mile thick, meaning only limited work has been undertaken to quantify the true scale of Greenland’s deposits.”

An even bigger challenge is the higher costs of developing a mining industry in Greenland’s harsh terrain, where there’s little to no existing infrastructure. There are just a few short, warmer windows when drilling and mining are practical; there is less daylight than almost anywhere on earth; and most of the terrain is accessible only by helicopter.

But the less-discussed issue is that mining is only part of the equation, said Jennifer Li, senior geopolitical analyst for the Rystad Energy research firm.

In tandem, the U.S. must develop a much more extensive rare-earths processing and refining industry if it wants to break China’s near-global monopoly on the complicated refining process. That would mean constructing more minerals refineries in Greenland or elsewhere in the U.S. (Currently some domestic projects are underway, including ones with U.S. subsidies and direct government equity investments.)

The U.S. would also likely have to further subsidize the critical minerals sales with a floor pricing mechanism, to compete against China’s repeated price-dumping practices.

A race for resources

Greenland and Venezuela may represent very different cases, Li said, but they both come back to Trump’s focus on Western Hemisphere dominance and “governing from afar in order to try to change the policy regime.”

In Venezuela, the focus is on crude oil. In Greenland, it’s on critical minerals mining, including rare earths and uranium, and oil drilling. Greenland currently has moratoriums on both uranium mining and on oil drilling—minus grandfathered licenses that allowedone Texas company to drill for oil this summer. “There are a lot of ecological concerns,” Lisaid.

Trump could theoretically end those moratoriums and expedite permitting, essentially green-lighting Greenland for more mining and oil drilling.

Still, “even green-lighting rhetorically isn’t going to lead to seismic changes overnight,” Li said, given the historic lack of success in mining and oil drilling exploration and the many years of infrastructure construction required to build a commercial industry. A “more cooperative dialogue” with Greenland, Denmark, and NATO is a more feasible approach, Li said, than taking things further with annexation or military action.

Current tensions aside, Greenland is eager to attract much more U.S. investment, just not at the expense of ownership and sovereignty, said Christian Keldsen, managing director of the Greenland Business Association.

After all, 97% of Greenland’s exports are seafood, mostly shrimp. And Denmark’s subsidies account for over half of Greenland’s total revenues. Mining is only a tiny piece of the pie. Greenland wants the U.S. to invest in its mining and energy sectors, even developing data center campuses in the spacious and cold terrain that could prove suitable for such facilities, Keldsen said.

Just don’t conquer the icy and barren island. “We’re somewhat irritated by this. We’ve had an open business relationship with the U.S. for years,” Keldsen said. “All this talk creates instability and noise in the background. And, if there’s anything investors don’t like, it’s instability.”

What Trump wants

For all the focus on seizing Greenland of late, it was a cosmetics heir who first put the bug in Trump’s ear during his first term.

Back in 2018, during his first presidential term, Trump’s longtime friend, billionaire Ronald Lauder—from the family of Estée Lauder fame—discussed with Trump the importance of Greenland’s resources and strategic Arctic positioning, especially as ongoing global warming melts the ice sheets and creates more passageways between the U.S. and Russia. (Lauder declined comment for this story.)

Shortly thereafter, Australian geologist Greg Barnes, who founded the massive Tanbreez rare earths mining project in Greenland, which remains in development, briefed Trump at the White House. Last year, New York-based Critical Metals acquired 92.5% ownership of Tanbreez. A pilot project launched earlier in January, although full construction is yet to begin.

“In the 19th century, there was the gold boom. The 20th century was the oil boom,” Critical Metals CEO Tony Sage told Fortune in a recent interview. “We’re in the rare earths boom now, but this boom is going to fund everything for the next 30 to 50 years. Everything in your life needs rare earths.”

The rationale for acquiring Greenland may have less to do with the economic case, and more with Trump’s ego and his real estate background, said historians and analysts who are critical of the idea.

By a difference of just 8,000 square miles, an annexation of Greenland and its estimated 836,000 square miles would exceed the 1803 Louisiana Purchase and its 828,000 square miles, potentially making it the largest acquisition in U.S. history, noted David Silbey, a military historian at Cornell University.

“This is the biggest land grab ever. He loves big things, huge things, he would say,” Silbey said. “He’s a New York real estate guy. He likes to grab land, and he grew up in a world where bullying was part of business practice. He like to bully, and he’s picking on the little guy.”

Because Greenland doesn’t “move the needle economically in any way, shape, or form,” Trump following his real estate instincts is the most logical answer, Silbey said.

When it comes to hugeness, don’t negate the distorted perspective of maps. The Mercator global maps that Trump and many others grew up with, like the one below, show a Greenland that’s appears to be almost as large as all of Africa. In fact, Greenland is one-fourteenth the size of Africa, although it’s still of course quite large (more than triple the geographic footprint of Texas).

Getty Images

“We try to rationalize irrational behavior. This is classic Trump ego politics,” said Humpert of The Arctic Institute. “It’s about him putting a Trump tower in Nuuk and saying he made the U.S. larger than any other president.”

Militarily, Humpert is quick to point out that China and Russia have more ships and submarines traveling near Alaska’s coast than Greenland’s ice. “There’s some truth to the Arctic heating up and there being more power politics in the Arctic,” he said. “But the [U.S.] should take care of its own backyard first.”

Silbey agreed. Offshore of Greenland represents one of the fastest routes between the U.S. and Russia, but existing defense treaties with Denmark give Trump all of the necessary military access for bases and waterway patrols. From a foreign policy standpoint, he said, annexation “is just categorically dumb. You’re blowing up NATO for access you already have.”

A potentially more cynical view comes from Daniel Immerwahr, foreign relations historian at Northwestern University. Immerwahr says Trump is abandoning the U.S.’s long-standing soft power diplomacy approach—the U.S. maintains 750 military bases in other countries—that was intended to avoid wars over land and resources, and is now focusing on the old-school colonialism of ownership and control, especially in the Western Hemisphere

“It may be that we’re entering a world of closed borders, in which case it makes more sense for security reasons to lock down the territories that contain the things you need because you might be afraid some other country would close trade lines,” Immerwahr said, citing critical minerals as an example.

“China’s desires on Taiwan and Russia’s invasion of Ukraine have corresponded to the more closed annexationist model,” he added. He also noted that a U.S. seizure of Greenland might be seen as a green light for China and Russia to follow suit in their own spheres of influence.

Trump has repeatedly insisted that, if the U.S. doesn’t acquire Greenland, then “Russia or China will take it over” and exploit its resources and strategic military positioning. But China has invested in many projects in Greenland that have mostly failed, and has largely pulled out since, said Adam Lajeunesse, chair in Canadian and Arctic policy at St. Francis Xavier University in Nova Scotia.

There’s no logic to a Chinese or Russian takeover, especially when Greenland has U.S. and NATO military backing, he said.

“That’s a myth,” Lajeunesse said. “The economic bogeyman the Trump administration is putting out there is really quite fictitious.”