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Global CEO confidence returns to pre-pandemic levels: KPMG study

The KPMG 2021 CEO Outlook asked more than 1,300 global CEOs - including 150 in the UK - about their strategies and outlook the next three years.

The KPMG 2021 CEO Outlook asked more than 1,300 global CEOs - including 150 in the UK.

  • Eight out of 10 global executives say they are ready to make an acquisition in the next three years
  • Just 21 percent of global CEOs – 14 percent in the UK - now say they are planning to downsize, or have already downsized, their organisation’s physical footprint
  • And 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

CEOs of the world’s largest businesses are increasingly optimistic about the outlook for their own business, and 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 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.

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.

Bill Thomas, Global Chairman & CEO, KPMG, said: “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.”

Jon Holt, Chief Executive of KPMG in the UK, said: “After a difficult 18 months, it’s encouraging to see CEOs in the UK and globally thinking about growth and investment for the future with renewed confidence and optimism. CEOs have had to pivot their business strategies to face into many uncertainties brought by the pandemic, and now they are looking to move their plans from resilience to expansion as the economy bounces back.

“ESG is also very much top of the agenda for CEOs, and they are right to build a sustainable recovery and make decisions that benefit wider society. Now is the time for a renewed push on setting out their businesses’ ESG credentials with COP26 just months away, and clients and investors laser-focused on working with businesses who have their own house in order.”

 

Key findings

Changing sentiment on the future of work

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.

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 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.

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.

Shifting focus toward operational and environmental risks

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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Unprecedented international tax reforms a significant focus for CEOs

Three out of four (75 percent globally, 77 percent in the UK) 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 (78 percent in the UK) of senior executives agree that the proposed global minimum tax regime is of “significant concern” to their organisation’s goals on growth. Meanwhile, they are more worried about regulatory and tax risks than they were prior to the pandemic (reference table one above).

The research found that 74 percent (79 percent in the UK) 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, a majority (69 percent globally, 76 percent in the UK) of CEOs are feeling increased pressure to report their tax contributions publicly as part of their broader ESG commitments.

ENDS

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.

For media requests, please contact:

Tanya Holden

Deputy Head of Media Relations, KPMG in the UK

+447874 888656

tanya.holden@kpmg.co.uk

 

Amy Greenshields

KPMG International

+1 416 727 1973

amygreenshields@kpmg.ca

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 three-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 organisation 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.