Jon Holt, Chief Executive of KPMG in the UK, said:
“UK business leaders are anticipating and preparing for an imminent recession. Many have to make difficult choices now to help their businesses withstand the volatile conditions they face, with some tell us they are cutting back on important areas like investing in their workforce and making their business more sustainable.
“Political uncertainty and regulatory change remain the biggest growth risks for business leaders and may have a subsequent impact on their confidence to invest in the future. However, it is positive to see that most of them are seeing the light at the end of the tunnel, having taken action and feeling positive about future economic recovery.”
ADDITIONAL FINDINGS:
Hiring freezes and downsizing under heavy consideration for CEOs
With the economic turmoil continuing, 39 percent of CEOs (43 percent in the UK) say they have implemented a hiring freeze, and 46 percent are considering reducing their workforce in the next 6 months (53 percent in the UK ). However, the three-year view is more optimistic with only 9 per cent of Global CEOs and 6 per cent of UK CEOs expecting further reduced numbers.
Uncertainty fuels long-term digital transformation
As the current uncertainty pushes CEOs to continue to prioritize digital transformation, 40 percent of businesses (36 percent in the UK) have paused their digital transformation strategies and another 37 percent (36 percent in the UK) plan to take such steps in the next 6 months.
In the longer term, more than a quarter (28 percent in the UK) believe that advancing digitalization and business connectivity is essential to achieving growth goals over the next 3 years. Seventy-four percent (67 percent in the UK) also agree that their organization’s digital and ESG strategic investments are inseparable.
TABLE: Top 3 current concerns for CEOs
|
GLOBAL |
UK |
|
1. Pandemic fatigue or constant uncertainty/restriction |
1. Economic factors (interest rates, expected recession, inflation) |
|
2. Economic factors (interest rates, expected recession, inflation) |
2. Pandemic fatigue or constant uncertainty/restriction |
|
3. Emerging / disruptive technology |
3. Emerging / disruptive technology |
Top risks identified by UK CEOs as threats to company growth over the next 3 years, while emerging/disruptive technologies and operational risks top the list for Global CEOs.
Cyber security is no longer corporations’ biggest threat, with more companies prepared for attacks
Cyber security has dropped from the top 5 risks to growth over the past year, with only 6 per cent of CEOs (7 per cent UK CEOs) naming it as their top risk (17 per cent in February 2022). However, the cyber environment is evolving with 77 percent saying their organization views information security as a strategic function and as a potential source of competitive advantage (70 percent of UK CEOs). Geopolitical uncertainty has also increased concerns of corporate cyber-attacks, according to 7 in 10 CEOs (72 percent – 66 percent in the UK).
Nearly three-quarters of organizations (72 percent – 63 percent in the UK) have a plan to manage ransomware attacks. However, more CEOs admit they are ill-prepared for a cyber-attack with nearly a quarter (24 percent – 19 percent in the UK) admitting this in 2022, compared to 13 percent in 2021.
Stakeholder pressure increases ESG accountability
When asked about their top challenge in communicating ESG performance to stakeholders, nearly one-fifth (17 percent for both Global and UK CEOs) indicated it was stakeholder skepticism over greenwashing, up from 8 percent in 2021 More than one-third (38 percent) of CEOs say their organizations struggle to articulate a compelling ESG story – 42 percent in the UK. Nearly three-quarters of respondents (72 percent globally and 66 percent of UK CEOs) also believe that stakeholder analysis of ESG issues — such as gender equality and climate impacts — is will continue to accelerate.
On talent, compared to early 2022, more C-suite executives believe that having the right talent and skills is also key to achieving net zero — or similar — ambitions. Almost a quarter (22 percent – 21 percent in the UK) say a lack of skills and expertise is hindering the implementation of solutions.
Economic pressure is slowing ESG ambitions
Global CEOs recognize the importance of ESG initiatives in their businesses, especially when it comes to improving financial performance and driving growth. Indeed, 69 percent of senior executives (84 percent in the UK) perceive greater demand from stakeholders for increased reporting and transparency on ESG — 58 percent by 2021.
Nearly half (45 percent – 39 percent of UK CEOs) of CEOs agree that ESG progress improves a company’s financial performance, an increase from 37 percent for both Global CEOs and UK just 1 year ago. However, as economic uncertainty continues, half have paused or reconsidered their existing or planned ESG efforts in the next 6 months (42 percent in the UK) and 34 percent have already done so (35 percent in the UK).
AFTER
The full findings of the KPMG CEO Outlook survey include qualitative interviews with the CEOs of: AMP, Bankinter, Fujitsu, Ricoh Europe, Tata Steel and ServiceNow.
To view additional information about the survey, please visit http://www.kpmg.com/CEOoutlook. You can also follow @KPMG on LinkedIn and Twitter for updates and conversations on #CEOoutlook.
For press requests, please contact:
Chris Mostyn
Deputy Head of Media Relations
KPMG UK
M: 07512 448000
Amy Greenshields
KPMG International
+1 416 727 1973
Notes to Editors:
About KPMG’s CEO Outlook
The 8th edition of the KPMG CEO Outlook, conducted with 1,325 CEOs between July 12 and August 24, 2022, provides unique insight into the mindset, strategies and planning tactics of CEOs not only comparable to pre-pandemic until now , but also in the CEO Pulse Survey conducted by KPMG. between January 12 and February 9, 2022, with 500 CEOs prior to the Russian government’s invasion of Ukraine.
All respondents have an annual revenue of more than US$500M and a third of the companies surveyed have more than US$10B in annual revenue. The survey included leaders from 11 major markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, UK and US) and 11 major industry sectors (asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology, and telecommunications). NOTE: some numbers may not add up to 100 percent due to rounding.
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