Launching aggressive M&A plans to capture market opportunities
CEOs of the world’s largest businesses are increasingly optimistic about the outlook for their own business and despite the Delta variant slowing down the ‘return to normal’, 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 about their strategies and outlook over a 3-year horizon, finds that 60 percent of leaders are confident about the global economy’s growth prospects over the next 3 years (up from 42 percent in the January/ February’s 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 identifying inorganic methods (e.g. joint ventures, M&A and strategic alliances) as their organization’s main strategy for growth. A majority (87 percent) of global leaders stated that they are looking to make acquisitions in the next 3 years to help grow and transform their businesses.
The survey found that 30 percent of CEOs plan to invest more than 10 percent of their revenues toward sustainability measures and programs over the next 3 years.
Jamal Fakhro, KPMG in Bahrain’s Managing Partner, said: “The past year and a half has been challenging for companies in Bahrain and across the global markets. Despite the challenges, CEOs remain optimistic and confident about the economic recovery. According to the survey, business leaders are actively pursuing the growth of their operations, and are re-strategizing their go-to market approach. This is a testament to the ‘back- to-business’ planning. However, supply chain, cyber security, evolving customer behaviors and climate change/ ESG risks have all been shortlisted by global CEOs as some of the leading threats to growth within the marketplace.”
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.
Table 1: Biggest risks to growth over the next 3 years
| 2021 CEO Outlook (July/Aug 2021) | 2020 CEO Outlook pulse (July/Aug 2020) | ||
| Risk to growth | Rank | Risk to growth | Rank |
| Cyber security risk | #1 | Talent risk | #1 |
| Environmental / climate change risk | #1 | Supply chain | #2 |
| Supply chain risk | #1 | Return to territorialism | #3 |
| Emerging / disruptive technology risk | #2 | Environmental / climate change risk | #4 |
| Regulatory risk | #2 | Cyber security risk | #5 |
| Operational risk | #2 | Emerging / disruptive technology risk) | #6 |
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, 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.
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.
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 3-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 organization 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.
