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CEOs name climate change as number one risk to organizational growth

Climate change as top risk to organizational growth

76% say growth will depend on navigating the shift to a low-carbon economy.

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CEOs name climate change the top risk to organizational growth in 2019, ahead of technological disruption, return to territorialism, cyber security and operational risk, according to the findings from KPMG’s 2019 Global CEO Outlook (PDF 934 KB). This marks the first time in the five-year history of the survey that climate change ranked top of the list.

The study, which surveyed 1,300 CEOs across 11 key markets and 11 key industry sectors, indicated that more than three-quarters (76%) of those surveyed said that their organization’s growth will depend on their ability to navigate the shift to a low-carbon, clean-technology economy. 

“Climate change has evolved beyond just an environmental issue to a pressing financial one as CEOs are feeling investor and stakeholder pressure to move the world away from a sole reliance on fossil fuels,” said Regina Mayor, Global and U.S. Sector Leader for Energy and Natural Resources at KPMG. “As we continue to consume energy at a record pace, organizations are thinking about ways to incorporate a mix of energy sources, made up of both fossil fuels and renewables.”

Markus Tacke, CEO of Siemens Gamesa – a world leader in renewable energy – remains optimistic: “Generally we see growth opportunities, especially in the renewables and wind industry. While the prognosis of the world economy seems to have greater downside risk than upside, the current fundamental of our [energy] industry gives us every reason to have an optimistic outlook.” 

Focus on energy

Of the 1,300 CEOs surveyed in the 2019 CEO Outlook, 130 were from top global energy companies and also cited climate change as a top risk to organizational growth, followed by cyber security and emerging technologies. In fact, more than 80% of energy CEOs say that they’re personally leading the technology strategy for their organizations, and 79% are placing more capital investment in buying new technologies to improve their organization’s resiliency.

According to the report, while 94% of energy CEOs are confident in their business’ growth prospects, only 65% feel the same way about the global economy. On the topic of growth, 60% agree that acting with agility is the new currency of business – and that if they’re too slow to act, they could face bankruptcy. To pursue growth objectives over the next three years, 66% of executives plan to increase investment in disruption detection and innovation processes. Other strategies include setting up accelerator programs for start-up firms, joining industry consortia focused on development of innovative technologies, and pursuing corporate venturing.

To ensure their organizations are future-ready, more than three-quarters (85%) plan to upskill employees in new digital capabilities to develop a more effective workforce.

“The industry is still recovering from the hangover of last year’s commodity price downturn and uncertainties around the global economy, but executives are taking a disciplined approach around their capital investments to deliver value and explore new technologies,” said Mayor.

For information, contact:

Megan E. Dubrowski
KPMG US
+201 803 8736
mdubrowski@kpmg.com

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