Supply chain one of biggest threats to business recovery

7 September 2021

Supply chain disruption is one of the three biggest risks to business growth in the coming years, according to a survey of business leaders.

The KPMG 2021 CEO Outlook report includes views from 1,325 CEOs across 11 major markets on rebuilding the economy and society in the wake of the Covid-19 pandemic.

When looking at risks for growth over the next three years, CEOs identified supply chain, cyber security and climate change as the top risks.

The study found that overall CEOs have become much more optimistic about the future of the global economy, with 60% of respondents expressing confidence in the growth prospects for the world’s economy in the next three years – almost almost twice as many as at the same time a year ago, and up from 42% in the January/February 2021 survey.

The latest was almost back to the pre-pandemic levels in January/February 2020, when 68% of respondents had foreseen a positive outlook for growth prospects.

Overall, 87% of CEOs said they were looking to make deals in the next three years, with half of these characterising their M&A appetite as ‘high’.

While building security into their own business was a priority, 79% of respondents said that protecting their partner ecosystem and supply chain was just as important as building their own cyber defences.

CEOs are also looking to get on the front foot when it comes to disruption and innovation, the report concluded, with 67% saying they would increase investment in disruption detection and innovation processes.

Investment in environmental, social and governance (ESG) was also a priority for many CEOs, although support was needed, the study found. The report said that 58% of respondents were getting increased demand for reporting and transparency on ESG issues from stakeholders. However, 42% said they were struggling to tell a compelling ESG “story”.

And while three quarters considered that digital and ESG strategic investments were inextricably linked, 77% said that government stimulus was required to turbocharge climate investments.

Although 71% of CEOs acknowledged they would be increasingly held responsible for progress in addressing social issues such as diversity, equity and inclusion, 56% said that they would struggle to meet fast rising expectations of the public, investors and government.

The report concluded that CEOs intended to deliver on their purpose commitments, making the ESG investments and changes necessary to address inequity, and launch the race to net zero emissions.

They are also looking to drive growth and prosperity through digital agility and business model innovation, while ensuring that technology investments are matched by investment in human skills, KPMG found.

“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,” said KPMG global chairman & CEO Bill Thomas.

“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."

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