CEOs of the world’s largest businesses are increasingly optimistic about the global economy’s immediate prospects.
Despite a slower ‘return to normal’ than expected, CEOs’ expectations have finally reached above pre-pandemic levels.
The KPMG 2021 CEO Outlook found that 60 per cent of leaders are confident about the global economy’s growth prospects over the next three years, an increase from 42 per cent in the January global pulse survey.
The survey asked more than 1,300 global CEOs, including 150 in the UK, about their strategies and outlook over a three-year horizon.
This prospect of a stronger global economy is leading CEOs to invest in expansion and business transformation. The survey showed 69 per cent of senior executives (67 per cent in the UK) are identifying inorganic methods (e.g. joint ventures, M&A and strategic alliances) as their organisation’s main strategy for growth.
Eight out of 10 global executives also say they are ready to make an acquisition in the next three years to help grow their business.
Bill Thomas, Global Chairman and CEO at KPMG, commented: “Despite the continued uncertainty around the pandemic, CEOs are increasingly confident that the global economy is coming back strong. This confidence has put leadership in an aggressive growth stance.”
“If there is a positive to come out of the past 18 months, it is that CEOs are increasingly putting ESG at the heart of their recovery and long-term growth strategies. The unfolding climate and societal crises have made it clear that we need to change our ways and work together.
The survey highlighted a significant shift in CEO’s attitudes to things like sustainability, hybrid working, cyber security and tax transparency.
For example, just 21 per cent (14 per cent in the UK) of CEOs now say they are planning to downsize, or have already downsized, their organisation’s physical footprint. This is a dramatic shift from the first wave of the pandemic in August 2020, when 69 per cent of global leaders said that they planned to downsize their space.
Instead, CEOs are focused on providing increased flexibility for their workforce with 51 per cent looking to invest in shared office spaces.
Furthermore, 37 per cent of global and UK executives have implemented a hybrid model of working for their staff, where most employees work remotely two to three days a week.
Additionally, the survey found that 35 per cent of UK CEOs plan to invest more than 10 per cent of their revenues toward sustainability measures and programs over the next three years.
With just over a quarter of business leaders concerned that failing to meet climate change expectations will result in public markets not investing in their business.
Though, three out of four executives believe government stimulus will be required if all businesses are to reach net zero. The majority also identified COP26 as a pivotal moment to inject urgency into the climate change agenda.
When looking at risks for growth over three years, senior executives identified supply chain, cyber security and climate change as the three areas they see as top risks.
The research also found that the majority of CEOs recognise the strong link between the public’s trust in their businesses and how their tax approach aligns with their organisational values. As businesses aim to build back better, CEOs are feeling increased pressure to report their tax contributions publicly as part of their broader ESG commitments.