Global CEO confidence returns to pre-pandemic levels
Launching aggressive M&A plans to capture market opportunities
Launching aggressive M&A plans to capture market opportunities
- Eight out of ten global executives say they are ready to make an acquisition in the next 3 years
- Business leaders believe government stimulus needed to meet net-zero targets
- Three out of four CEOs believe that the pressure put on public finances during the pandemic has increased the urgency of multilateral cooperation in the global tax system
Hong Kong, 1 September, 2021 — CEOs of the world’s largest businesses are increasingly optimistic about the outlook for their own business and despite the Delta variant slowing down the ‘return to normal’, their confidence in the global economy has returned to levels not seen since the start of the pandemic. The KPMG 2021 CEO Outlook, which asked more than 1,300 global CEOs about their strategies and outlook over a 3-year horizon, finds that 60 percent of leaders are confident about the global economy's growth prospects over the next 3 years (up from 42 percent in the January/February’s 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 identifying inorganic methods (e.g. joint ventures, M&A and strategic alliances) as their organization’s main strategy for growth. A majority (87 percent) of global leaders stated that they are looking to make acquisitions in the next 3 years to help grow and transform their businesses.
The survey found that 30 percent of CEOs plan to invest more than 10 percent of their revenues toward sustainability measures and programs over the next 3 years.
Bill Thomas, Global Chairman & CEO, KPMG, says:
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. While inorganic growth strategies are a priority, CEOs are also looking to expand organically and continue to assess the future of work to ensure they can attract top talent.
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. I’m encouraged about what the future holds because business leaders are acknowledging that they need to be the drivers of positive change, supporting measures to tackle environmental dangers, as well as societal challenges — from gender and race, to equity and social mobility.
In contributing his observations on findings from the Asia Pacific region, Honson To, Chairman for KPMG Asia Pacific and KPMG China, remarked:
CEOs in Asia Pacific (ASPAC) are generally more optimistic than their global counterparts on prospects for the world economy over the next three years. They anticipate headcount increases across the region, with lasting changes to ways of working brought about by the pandemic. While talent continues to be a consideration, supply chain has gone up the ranks as a key threat to the growth of organisations in ASPAC and outranks similar concerns globally. Like their global counterparts, ESG will be a crucial component of organisational strategy among ASPAC leaders, and I’m heartened to see that both the social and environmental dimensions are receiving ever increasing attention at the highest organisational levels.
Reaching net zero with government support
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) 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) of CEOs said that they face increased demands from stakeholders (e.g. investors, regulators and customers) for more reporting on ESG issues.
Three out of four (77 percent) of global executives believe that government stimulus will be required if all businesses are to reach net zero. Furthermore, three-quarters (75 percent) of global CEOs 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 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). More than eight out of ten (86 percent) global leaders state that their corporate purpose will shape capital allocation and inorganic growth strategies.
Shifting focus toward operational and environmental risks
When looking at risks for growth over 3 years, senior executives identified three areas they see as top risks: supply chain, cyber security and climate change. Fifty-six percent of global CEOs say that their business’ supply chain has been under increased stress during the pandemic.
Table 1: Biggest risks to growth over the next 3 years
|2021 CEO Outlook (July/Aug 2021)||2020 CEO Outlook pulse (July/Aug 2020)|
|Risk to growth||Rank||Risk to growth||Rank|
|Cyber security risk
|Environmental/climate change risk
||#1||Supply chain risk
|Supply chain risk
||#1||Return to territorialism risk
|Emerging/disruptive technology risk
||#2||Environmental/climate change risk||#4|
||#2||Cyber security risk
||#2||Emerging/disruptive technology risk
Changing sentiment on the future of work
Just 21 percent of CEOs now say they are planning to downsize, or have already downsized, their organization’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) looking to invest in shared office spaces. Furthermore, 37 percent of global executives have implemented a hybrid model of working for their staff, where most employees work remotely 2–3 days a week.
Unprecedented international tax reforms a significant focus for CEOs
Three out of four (75 percent) CEOs believe that the pressure put on public finances by the pandemic response has increased the urgency for multilateral cooperation on the global tax system. At the same time, 77 percent of senior executives agree that the proposed global minimum tax regime is of “significant concern” to their organization’s goals on growth. Meanwhile, they are more worried about regulatory and tax risks than they were prior to the pandemic (reference table 1 above).
The research found that 74 percent of CEOs recognize the strong link between the public’s trust in their businesses and how their tax approach aligns with their organizational values. As businesses aim to build back better, a majority (69 percent) of CEOs are feeling increased pressure to report their tax contributions publicly as part of their broader ESG commitments.
The full findings of the KPMG CEO Outlook survey will include qualitative interviews with the CEOs of: Edward Jones, Greater Toronto Airports Authority, Mitsubishi UFJ Financial Group and Snowflake.
To view additional information about the survey please visit home.kpmg/CEOoutlook. You can also follow @KPMG on LinkedIn and Twitter for updates and the conversation with #CEOoutlook.
Notes to Editors:
About KPMG’s CEO Outlook
The KPMG CEO Outlook provides an in-depth three-year outlook from thousands of global executives on enterprise and economic growth.
The KPMG 2021 CEO Outlook asked 1,325 CEOs from the world’s most influential companies to provide their 3-year outlook on the economic and business landscape, as well the impact that the on-going COVID-19 pandemic will have on their organizations’ future. All respondents have annual revenues over US$500M and a third of the companies surveyed have more than US$10B in annual revenue.
The survey was conducted 29 June – 6 August 2021 and included leaders from 11 key markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, UK and US) and 11 key industry sectors (asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology, and telecommunications). NOTE: some figures may not add up to 100 percent due to rounding.
About KPMG International
KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. We operate in 146 countries and territories and in FY20 had close to 227,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.
About KPMG China
KPMG China is based in 28 offices across 25 cities with around 12,000 partners and staff in Beijing, Changsha, Chengdu, Chongqing, Foshan, Fuzhou, Guangzhou, Haikou, Hangzhou, Hefei, Jinan, Nanjing, Ningbo, Qingdao, Shanghai, Shenyang, Shenzhen, Suzhou, Tianjin, Wuhan, Xiamen, Xi’an, Zhengzhou, Hong Kong SAR and Macau SAR. Working collaboratively across all these offices, KPMG China can deploy experienced professionals efficiently, wherever our client is located.
KPMG is a global network of professional independent member firms. We operate in 146 countries and territories and have about 227,000 people in FY2020 providing Audit, Tax and Advisory services. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its affiliates provide no client services.
In 1992, KPMG became the first international accounting network to be granted a joint venture licence in mainland China. KPMG was also the first among the Big Four in mainland China to convert from a joint venture to a special general partnership, which it did on 1 August 2012. Additionally, the Hong Kong firm can trace its origins to 1945. This early commitment to the China market, together with an unwavering focus on quality, has been the foundation for the firm’s accumulated industry experience, and is reflected in KPMG’s appointment to provide multi-disciplinary services (including audit, tax and advisory) to some of China’s most prestigious companies.