What should boards ask about AI? A briefing for fashion directors

KEY TAKEAWAYS Summary by the editors

1. Boards should ask five groups of questions about AI: strategy and value, data and suppliers, risk and regulation, people and skills, and measurement.
2. The EU AI Act applies in stages: most prohibitions from 2 February 2025, general-purpose AI model obligations from 2 August 2025, Article 50 transparency obligations from 2 August 2026 and Annex III high-risk obligations from 2 December 2027, according to a published summary of the Act.
3. Article 4 of the AI Act, on AI literacy, has applied since 2 February 2025 and requires providers and deployers to take measures to support staff AI literacy, with enforcement by national authorities.
4. The US Federal Trade Commission stated in 2024 that there is no AI exemption from the laws on the books, and brought five actions against companies that overstated AI capabilities or sold AI tools used to deceive.
5. McKinsey's 2026 survey found that 37% of respondents attribute some EBIT impact to AI, so a board should expect management to show measured results, not only activity.

A board briefing on AI should help directors ask five groups of questions: where AI fits the strategy and what value is expected, what data and suppliers it depends on, which risks and regulations apply, whether people have the skills and rules they need, and how results will be measured. Directors are not expected to judge technical detail, but they are expected to see that management has answers, evidence and accountable owners. This briefing is general editorial guidance and not legal advice.

Why is AI a board matter and not only an IT matter?

AI touches strategy (how customers find and buy fashion), operations (planning, sourcing, customer service), legal exposure (regulation, intellectual property, advertising claims) and people. McKinsey and the Business of Fashion, in The State of Fashion 2026, describe AI as moving from competitive edge toward business necessity, report that more than 35% of executives already use generative AI, and note that shoppers use large language models to search and compare products, making chatbot responses what the report calls the new SEO.

At the same time, financial evidence is thinner than activity. McKinsey's 2026 global survey found that 37% of respondents attribute at least some EBIT impact to AI, essentially unchanged from the year before, and that about 6% qualify as high performers. Boards should expect management to separate activity from results.

What should directors ask about strategy and value?

• Which three AI initiatives matter most to our strategy, and what would success look like in numbers?
• What is the baseline today, who owns each benefit, and when will we review it?
• What are we deliberately not doing, and why?
• How might AI search and shopping assistants change how customers and wholesale buyers find our products, and what are we doing about our product data?
• What happens if the initiative fails, and how much would we have spent?

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What should directors ask about data and suppliers?

Most AI failures in companies trace back to data quality, access and supplier dependence. Directors can ask whether product, customer and supply data are accurate and owned, which suppliers hold company data, what the contract says about ownership and deletion, and what an exit would cost. Portability matters because switching a data-heavy tool late is expensive, and a board that asks early is likelier to see the exit plan written before it is needed.

Which regulations should a board know about?

These dates come from a published summary of the Act and reflect amendments under the Digital Omnibus described by the European Commission, so directors should confirm current dates with counsel. The Act distinguishes providers from deployers, and a fashion company using a third-party tool is usually a deployer. A deployer is an entity using an AI system in a professional capacity, and deployers of high-risk systems have fewer obligations than providers, though they still have some.

Beyond the AI Act, advertising and consumer law also apply. In September 2024 the US Federal Trade Commission announced Operation AI Comply, five actions against companies that overstated AI capabilities or sold AI tools used to deceive, and its then Chair stated that there is no AI exemption from the laws on the books. Boards should ask how marketing claims about AI features, whether the company's own or its suppliers', are substantiated.

What should directors ask about people and skills?

Ask what training has been given and to whom, what the rules are for using external AI tools with confidential data, and how roles are expected to change. Article 4 requires providers and deployers to take measures to support AI literacy, with no mandated level or certificate, and the Commission notes that lack of appropriate training may make enforcement more likely where an incident occurs. Boards should also ask management how job content is expected to change and whether employee representatives have been consulted where required. It is also worth asking how management would learn of a failure. Customer-facing assistants can give wrong or unsuitable answers, and generated product content can contain errors in sizing, composition or claims. A named owner, an escalation route and a log of incidents give the board something concrete to review.

Directors should also keep expectations realistic. McKinsey's survey found that about 20% of respondents say operating costs, including tokens, have constrained their AI use, so the cost of running AI at scale belongs on the board's agenda alongside the benefits. A proposal that shows only the upside has not been fully prepared, and one that shows no running cost has not been prepared at all.

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How should the board monitor progress?

1. A one-page quarterly AI dashboard: initiatives, owners, baselines, results, spend, incidents.
2. An inventory of AI systems in use, including those embedded in suppliers' software.
3. A named executive accountable for AI governance, reporting to the board or a committee.
4. An incident log covering errors, complaints and near misses.
5. An annual review of regulation, supplier dependence and skills.

Frequently asked questions

What should a board know about AI?

It should know where AI is used in the company, what value is expected and measured, which data and suppliers it depends on, which regulations apply and who is accountable. Technical detail is secondary to oversight.

When does the EU AI Act apply to fashion companies?

In stages: most prohibitions and Article 4 AI literacy from 2 February 2025, transparency obligations under Article 50 from 2 August 2026, and Annex III high-risk obligations from 2 December 2027, per a published summary. Check current dates with counsel.

Is a fashion company a provider or a deployer under the AI Act?

A company that uses a third-party AI system in a professional capacity is generally a deployer. A company that develops a system and places it on the market under its own name is a provider. Obligations differ.

How often should a board review AI?

Quarterly for a short dashboard of initiatives, results, spend and incidents, and annually for a deeper review of regulation, suppliers and skills.

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