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Tribune News Network
Chief executives of some of the world’s largest companies are more optimistic about the business outlook, with their confidence in the global economy returning to pre-pandemic levels despite uncertainties about the Delta variant of the coronavirus.
About 60 percent of the leaders are confident about the economy’s growth prospects over the next three years, up from 42 percent in a similar survey conducted earlier this year, consultancy KPMG said in its 2021 CEO Outlook. Most expect to make an acquisition to drive growth.
“Despite the continued uncertainty around the pandemic, chief executives are increasingly confident that the global economy is coming back strong,” Bill Thomas, global chairman and chief executive of KPMG, said. “This confidence has put leadership in an aggressive growth stance.”
Ahmed Abu-Sharkh, Country Senior Partner at KPMG in Qatar said, “CEO’s confidence in the global economy has risen significantly. In addition, CEO’s also see new levels of risk which naturally comes with new opportunities. Great leaders will focus on top risks such as cyber security, environmental, and supply chain to drive medium to long term growth, sustainability, profitability and competitive advantage.”
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.
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.
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