According to the findings of the 25th Annual Report of PwC CEO, the ongoing pandemic, but also market conditions, such as rising inflation, supply chain disruptions and the wave of resignations in various parts of the world, increase the pressure on CEOs worldwide. However, survey participants are more optimistic than ever in the last 10 years about the outlook for the economy for next year. More than three-quarters of CEOs (77%) predict that the global economy will improve, while only 15% expect conditions to worsen. The survey was conducted with the participation of 4,446 CEOs from 89 countries during the period October – November 2021.
Compared to last year’s levels, CEOs’ optimism for 2022 is 1 point higher, and 54 points higher than 2020, when more than half (53%) of CEOs predicted a declining economy.
Regardless of the general optimism among CEOs about economic growth in 2022, there is a different perception between individual countries and regions. Among the largest countries, India appears to have the highest optimism, with 94% of CEOs expecting global growth next year, up from 88% last year. Optimism is also steadily rising among CEOs in Japan (plus 16 points at 83%, up from 67% last year) and is slightly higher in the UK (plus five points at 82%). Italy and France have seen large increases in CEO optimism, perhaps as a result of stronger-than-expected economic recovery.
Bob Moritz, Global Chairman of PwC’s global network, states: “As the ongoing pandemic overshadows the international landscape, the high level of CEO optimism that preceded the new mutation demonstrates the strength and resilience of the global economy and CEOs’ ability to manage uncertainty There is nothing “normal” in the world we are currently called upon to work with, but we are beginning to get used to it. positive for 2022. ”
The power of trust
Trust has never been more important to a company’s success and never harder to earn and maintain. Based on the survey participants, a series of questions about their customers’ behavior reflects a correlation between customer confidence and CEO optimism. The CEOs of the companies that are ranked higher in the customers’ trust appear more confident about their growth prospects next year. 71% of the CEOs of the companies with the highest levels of trust are very or extremely confident about the prospects of increasing the revenues of their companies in the next 12 months, compared to only 47% of the companies with the lowest levels of trust.
Confidence has also been found to be linked to commitments to climate neutrality. CEOs of the highest ranking companies in terms of their customers’ trust are more likely to lead organizations that have committed to climate neutrality commitments (29%) compared to those ranked lower (16%). CEOs of “high trust” companies are also more likely to lead organizations that have linked non-financial results to their pay formation. About half of the CEOs who lead high-ranking trust organizations have linked indicators such as customer satisfaction (51%) and employee loyalty metrics (46%) to their personal bonuses or incentive plan.
Cyber risks and health risks are at the top of CEOs’ concerns
Despite the high optimism, there is still the risk of threats that could affect companies over the next 12 months. As last year, cyber and health risks are ranked as the main global threats, as recognized by 49% and 48% of CEOs, respectively. Macroeconomic instability follows by a narrow margin, with 43% of CEOs more or less worried about the potential impact of inflation, GDP fluctuations and labor market issues over the next year. A major concern is the ability to attract and retain human resources as 69% of CEOs concerned about the risks of social inequality cite it as an impact, as well as 62% of CEOs concerned about the risks of health.
More specifically and by industry, cyber risks are high on the agenda of financial services CEOs, 59% of whom cite cyberspace as a major threat. CEOs in manufacturing (40%) and consumer products (39%) showed lower levels of concern, despite the high volume of attacks observed in their market.
As it is understood, a high percentage of CEOs in the hospitality and leisure sector (75%) are concerned about the impact of health risks on their business. At the same time, 49% of CEOs of energy and utility companies consider climate change as the main threat for next year, with 15 percentage points higher than the global average.
Bob Moritz said: “When CEOs look at the next 12 months, they seem to be concerned about potential threats to their companies’ short-term performance, which could result from disruptions, including macroeconomic instability, as well as cyber and health risks. Although threats such as climate change and social inequality are lower on the list, it is crucial that we do not lose focus on these longer-term issues, as well as those that will determine the quality of the world in which we live and which we will pass it on to the next generation. ”
CEOs worldwide are looking for growth in the US
When CEOs are looking to increase their revenue next year outside their home country, the US is considered to be offering the greatest opportunities. 41% rank the US as one of the top countries for the growth prospects of their companies in the next 12 months, rising from 35% in 2021. China ranks second overall, with 27%, comparable to the ranking last year, followed by Germany (18%) and the United Kingdom (17%, up six points from last year).
Commitments to climate neutrality are not an immediate priority
The survey highlights the need for greater progress in achieving global climate targets, with less than a third of CEOs saying their company is committed to reducing emissions. Only 22% of CEOs surveyed said their companies had committed to zero carbon footprint (Net Zero), while 29% said they were planning to commit. A similar percentage (26%) have committed to climate neutrality, while 30% said that the planning of the relevant commitments is in progress.
Only a third of CEOs identified climate change as a top concern for next year, which reflects the belief that it will not affect revenue growth in the short term. Also, about 57% of CEOs who did not commit to zero carbon footprint or climate neutrality said they did not believe their companies were producing significant amounts of greenhouse gas (GHG) emissions.
While CEOs cited “mitigating climate change risks” as the most influential factor behind their climate neutrality strategies (63% said they had a large or very large influence), the next factor cited was ” meeting customer expectations “(61%), which reflects that taking action to tackle climate change is increasingly important for a company’s brand and delivering the value that customers expect.
Marios Psaltis, CEO, PwC Greece notes: “Pandemics and climate change are challenges companies are facing as never before. “The study shows that the level of trust is related to the optimism expressed by CEOs about revenue growth but also that the commitment to climate neutrality contributes significantly to building trust.”
The Greek findings of the research will follow soon.
Source From: Capital