The 2020 KPMG CEO Outlook pulse survey finds that whilst business confidence has fallen since January, senior executives in Ireland and worldwide are using this unparalleled moment in history to accelerate the use of technology whilst shifting and enhancing relationships with employees and society at large.
Access the full report or read our summary below.
Our latest CEO Outlook study highlights the following trends and developments:
Confidence in the economy has fallen: Optimism about global and national economies has unsurprisingly taken a hit. Worldwide, CEOs have become more cautious about the future performance of the global economy which is a big sentiment change since the beginning of the year with only one third (down from 68 percent in January 2020) optimistic about global growth prospects over the next three years. In contrast, CEOs in the Republic of Ireland (ROI) remain more optimistic about the world economy with just under two thirds (64 per cent) still confident about global growth (albeit down considerably from 84 percent in January). Meanwhile, their Northern Ireland (NI) counterparts are less confident about the world economy, with positive sentiment falling from 64 percent at the start of 2020 to 28 percent in August.
Taking stock of our domestic prospects, a slight majority of CEOs in ROI (56 percent) remain optimistic about Ireland’s growth prospects over the next three years – down from 92 percent in January – a 36 percent drop. Meanwhile, NI CEOs are somewhat less optimistic about the growth prospects for Northern Ireland with nearly half (44 percent) remaining upbeat about the domestic economy, however, this is still a sharp decline from the 80 percent expressing confidence in January.
Company earnings’ outlook remains challenging: Despite the economic uncertainty, a third of global leaders see their company’s earnings growth at more than 2.5 percent a year over the next three years. For ROI leaders this figure is 16 percent and 28 percent in NI. 23 percent of global leaders see their company’s earnings outlook over the next 3 years either flatlining or shrinking. Meanwhile in both ROI and NI that figure is broadly similar at 24 percent and 28 percent respectively.
Personal impact of COVID-19 on CEOs: 39 percent of global CEOs, 40 percent of ROI CEOs and 16 percent of NI CEOs have shared the pain of COVID-19 citing that their health, or the health of one of their family was affected. Globally, 56 percent have changed their strategic response to the pandemic based on personal experience, a figure which rises to 70 percent in ROI with all respondents in NI citing a similar shift in attitudes despite lower reported direct experience.
CEOs focused on digital transformation: Business leaders are betting on major dimensions of digital transformation and the vast majority (80 percent global; 81 percent ROI; 76 percent NI) have seen their transformation programmes accelerate during the lockdown period. Meanwhile, 60 percent of ROI CEOs and 44 percent of NI CEOs (67 percent worldwide) are likely to put more capital investment into technology than they are people.
New working reality: A large majority of CEOs surveyed say that remote working has widened their potential talent pool (73 percent global; 84 percent ROI; 80 percent NI). This aligns to the fact that in the short term there is an apparent general shift towards downsizing overall office space (69 percent global; 84 percent ROI; 72 percent NI).
Climate change efforts accelerated by COVID-19: Most CEOs want to accelerate their climate change gains as a result of the changes made during the pandemic (71 percent global; 80 percent ROI; 84 percent NI). Two thirds of global CEOs (65 percent) recognise that managing this risk will play a part in whether they keep their jobs over the next 5 years. This falls broadly in line with NI leaders (56 percent) but for ROI CEOs the figure is higher at 84 percent.
Businesses are more purpose-focused than before: Earlier this year many CEOs said their organisations have a larger role to play in society. 52 percent of ROI CEOs and 48 percent of NI CEOs said that they believe the public are looking to businesses to fill the void on societal challenges.
The pandemic has accelerated executives’ focus on their roles in society and appears to have driven further scrutiny of business practices. 62 percent of ROI CEOs (64 percent NI) say that they have had to re-evaluate their organisation’s purpose as a result of the COVID-19 crisis. Meanwhile, 68 percent of ROI leaders and 84 percent of NI leaders said they feel a degree of personal responsibility for change on societal issues. Over three quarters of CEOs (84 percent ROI; 76 percent NI;) said they now feel a stronger emotional connection to their organisation’s purpose since the crisis began.
This development has put ESG (Environmental, Social and Governance) near the top of the agenda for CEOs and almost two thirds (63 percent) of ROI CEOs and over half (56 percent) of NI leaders have shifted the focus towards the social component of ESG during this period of global uncertainty. However, despite the increased emphasis towards societal issues, many sectors continue to remain at risk from climate change. Indeed 65 percent of ROI CEOs and just over half of NI CEOs recognise that managing this risk will be key to determining their success.
Reports for both the Republic of Ireland and Northern Ireland will be available to download from 15 September 2020.
KPMG initially surveyed 1,300 CEOs in January and February including in both ROI and NI, before many key markets were beginning to feel the full impact of the pandemic crisis.
In July and August (6 July - 5 August 2020), KPMG conducted a follow-up survey of 315 CEOs across the globe including ROI and NI to understand how their thinking has evolved during the crisis. In both instances, all respondents have annual revenue over US$500M and a third of the companies surveyed have more than US$10B in annual revenue.
This year’s study, as in previous years, provides an in-depth three-year outlook of global executives on enterprise, social issues and economic growth. It also includes new and changing questions to capture CEOs’ outlooks on the evolving dynamics stemming from the COVID-19 pandemic.