Senior executives from 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 per cent of the leaders are confident about the economy's growth prospects over the next three years, up from 42 per cent 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."
The pandemic led to the world's deepest recession since the Great Depression. The global economy, which contracted 3.3 per cent in 2020, is expected to expand 6 per cent this year on the back of the rapid vaccine roll-out and the injection of about $25 trillion in fiscal and monetary stimulus by governments and central banks through the pandemic, according to the International Monetary Fund.
KPMG polled chief executives of more than 1,300 companies with annual revenues of more than $500 million in Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, Britain and the US between June 29 and August 6 about their outlook for the next three years.
About 87 per cent of those polled said that they are looking to acquire businesses in the next three years to help transform theirs. Close to 70 per cent of senior executives identified inorganic growth through joint ventures, mergers and acquisitions and strategic alliances as pillars of their expansion strategy.
The survey also found that 30 per cent of chief executives plan to invest more than 10 per cent of their revenue in sustainability measures and climate-related programmes over the next three years.
“If there is a positive to come out of the past 18 months, it is that chief executives are increasingly putting ESG [environment, social and governance standards] at the heart of their recovery and long-term growth strategies," Mr Thomas said. "The unfolding climate and societal crises have made it clear that we need to change our ways and work together."
Business leaders are recognising that they need to drive positive change, supporting measures to tackle environmental dangers and social challenges – from gender and race, to equity and social mobility, he said.
Top executives identified cyber security, climate change and supply chains as the major risks to growth over the next three years, the survey found.
More than half, 56 per cent, of global chief executives said their supply chain has been under increased stress during the pandemic, KPMG said.
"While the pandemic has continued to pose challenges in the form of supply chain disruptions, cyber security and increased pressure on public finances, environmental threats, such as climate change, also need to be addressed," Rasheed Al Qenae, managing partner of KPMG in Kuwait, said.
"The silver lining, however, remains the fact that more organisations are starting to incorporate ESG in their long-term growth plans, leaving the message that global reforms and collaboration will, in fact, be key in bringing about positive environmental and societal changes.”
Almost 80 per cent of respondents said a proposed minimum tax system was of "significant concern" regarding their growth goals.
The survey also revealed changes in executives' thinking about the future of work because of the pandemic.
Just 21 per cent of business leaders now say they are planning to downsize, or have already downsized, their organisation’s office space in contrast to August 2020 when 69 per cent said that they planned to cut space.
They are focused instead on providing increased flexibility for their workforce with 51 per cent, up from 14 per cent in the earlier survey, looking to invest in shared office spaces.
Thirty-seven per cent of executives have a hybrid work model for their staff in place, one where most employees work remotely for two to three days a week.