CEOs of the world’s largest businesses are increasingly optimistic about the outlook for their own business, according to the latest KMPG CEO Outlook Survey. Despite a slower ‘return to normal’ than expected, their confidence in the global economy has returned to levels not seen since the start of the pandemic. The number planning to reduce their office footprints has fallen dramatically since the height of the pandemic, and instead there is a growing focus on introducing flexible working cultures.
The KPMG 2021 CEO Outlook, which asked more than 1,300 global CEOs – including 150 in the UK – about their strategies and outlook over a three-year horizon, finds that 60 percent of leaders (58 percent in the UK) are confident about the global economy’s growth prospects over the next three years (up from 42 percent in January/February’s global pulse survey).
The prospect of a stronger global economy is leading CEOs to invest in expansion and business transformation, with 69 percent of senior executives (67 percent in the UK) identifying inorganic methods (e.g. joint ventures, M&A and strategic alliances) as their organisation’s main strategy for growth. A majority (87 percent) of global and UK leaders stated that they are looking to make acquisitions in the next three years to help grow and transform their businesses.
A fifth of CEOs say they are planning to downsize, or have already downsized, their organisation’s physical footprint
The survey found that 30 percent (35 percent in the UK) of CEOs plan to invest more than 10 percent of their revenues toward sustainability measures and programs over the next three years.
Just 21 percent (14 percent in the UK) of CEOs now say they are planning to downsize, or have already downsized, their organisation’s physical footprint, a dramatic shift from August 2020, with the first wave of the pandemic at its peak, when 69 percent of global leaders said that they planned to downsize their space.
CEOs are focused instead on providing increased flexibility for their workforce with 51 percent (up from 14 percent in the January/February’s pulse survey) – 43 percent in the UK – looking to invest in shared office spaces. Furthermore, 37 percent of global and UK executives have implemented a hybrid model of working for their staff, where most employees work remotely two–three days a week.
Among the many socio-economic, social and environmental challenges facing the world, stakeholders are putting immense pressure on businesses to tackle climate change and leave a positive impact on society. As a result, over a quarter (27 percent globally and in the UK) of business leaders are concerned that failing to meet climate change expectations will result in the public markets not investing in their business. Over half (58 percent globally, 66 percent in the UK) of CEOs said that they face increased demands from stakeholders (e.g. investors, regulators and customers) for more reporting on ESG issues.
Stakeholders are putting immense pressure on businesses to tackle climate change
Three out of four (77 percent) of global executives (80 percent in the UK) believe that government stimulus will be required if all businesses are to reach net zero. Furthermore, three-quarters (75 percent) of global CEOs (78 percent in the UK) have identified COP26 as a pivotal moment to inject urgency into the climate change agenda.
The research found that corporate purpose, what the company stands for and its impact on communities as well as the planet, is driving 74 percent (82 percent in the UK) of CEOs to act in addressing the needs of their stakeholders (customers, employees, investors and communities). There has also been a 10-point increase since the beginning of 2020 in the number of CEOs who say their principal objective is to embed purpose into the decisions they make to create long-term value for their stakeholders (64 percent globally, 69 percent in the UK). More than eight out of 10 (86 percent) global leaders (87 percent in the UK) state that their corporate purpose will shape capital allocation and inorganic growth strategies.
When looking at risks for growth over three years, senior executives identified three areas they see as top risks: supply chain, cyber security, and climate change. Fifty-six percent (59 percent in the UK) of global CEOs say that their business supply chain has been under increased stress during the pandemic.
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Source: Work Place Insight