What's keeping your CEO awake at night?

In terms of top concerns faced by business leaders, CEOs globally are fatigued by continued uncertainties posed by the pandemic, aside from the potential of rising interest rates, inflation and anticipations of a recession.

In Singapore, even as CEOs take steps to insulate their businesses from the upcoming recession, CEOs are more aware of the broader public scrutiny on their corporate purpose and environmental, social and governance (ESG) accountability, reflected by their choice of reputational risk (20%) as the top concern, according to KPMG's Global CEO outlook 2023.

Bill Thomas, global chairman and CEO, KPMG, said the global pandemic, geopolitical tensions, inflationary pressures and financial difficulties have come in short succession and taken a toll on the optimism of global CEOs. So while it's unsurprising the economic climate is now a top concern for business leaders, it's reassuring to see high levels of confidence among executives in their own companies and their longer-term prospects for growth.

"The events of recent years have created real turbulence for the business community. Our findings should provide some cautious optimism that, in contending with and overcoming these ordeals, executives are more confident in their companies' resilience and are focused on mitigating some of the very real uncertainties we face today," said Thomas.

However, economic pressures remain a real concern with over half of CEOs in Singapore (52%) mulling over whether to pause ESG efforts in the next six months. The table below lists the top three pressing concerns for CEOs globally and locally.

CEOs globally (38%) and in Singapore (32%) say that their top challenge in communicating their ESG performance lies in articulating a compelling ESG story to stakeholders – similar to last year. Global CEOs are also recognising the need to pay closer attention to the 'S' in ESG going forward, with nearly three-quarters of respondents (72%) believing that stakeholder scrutiny on social issues will continue to accelerate.

About 40% of Singapore CEOs say that taking a more proactive stance to societal issues – which will be the main driver towards accelerating their company's ESG strategy over the next three years. In fact, four in five Singapore executives (80%) have indicated that they have a responsibility as business leaders in driving greater social mobility.

ESG barriers

In Singapore, CEOs are seeing the biggest stakeholder demand from regulators (33%), with pressure from employees and new hires on the rise this year at 28% as compared with 0% last year.

Some of the barriers Singapore CEOs face in delivering their ESG strategy includes identifying and measuring agreed metrics (28%) and a lack of budget to invest in ESG transformation (20%).

Also key to achieving their net zero and climate ambitions will be in attracting the right talent and skills. Nearly a quarter (22%) of global CEOs say a lack of skills and expertise is hindering the implementation of solutions — similar to the 28% seen in Singapore and an increase from 16% earlier this year.

Talent remains an issue

Ahead of an anticipated recession, 88% of Singapore CEOs have embarked on or are planning a hiring freeze over the next six months. However, the CEOs also recognise that quality talent is critical for growth in the longer term.

Nearly a third (32%) of Singapore CEOs say their top operational priority over the next three years will be to strengthen their employee value proposition to attract and retain the necessary talent. When asked to take a three-year view, Singapore CEOs are more optimistic than their global peers – 92%  expect to eventually increase their headcount up to 10%, while the remaining 8% believe that it will stay the same. Globally, 21% of CEOs expect either the same or a further reduced headcount.

Digital transformation remains a priority

Uncertainty, coupled with a need to embrace a technology-driven future of work, is driving CEOs to continue to prioritise corporate digital transformation. Around 48% of Singapore CEOs recognise that driving such initiatives at a rapid pace will be critical in the competition for talent and customers. However, CEOs say their progress is being held back by struggles in deciding on the right technology (60%) and managing the risk and compliance of the transformation (68%).

In addition, 76% of Singapore CEOs are worried that global issues such as geopolitical tensions, the climate crisis, deglobalisation and the risk of stagflation could impact their digital transformation strategy over the next three years. Nevertheless, CEOs here are cognisant that they will need to do more to catch up with their peers globally, with only 28% stating that they are content with where they are on digital transformation as compared with 71% global CEOs.

Meanwhile, cyber security has dropped from the top five risks to growth over the past year, with only 6% of CEOs globally naming it as their top risk. With rising economic concerns, interest rate and regulatory risks have emerged as among the key threats to growth for CEOs in Singapore (16% each), cyber security risk has similarly fallen to 4%, placing it among the lowest. However, the cyber environment continues to evolve with 77% of CEOs globally and 60% of CEOs in Singapore saying that their organisation views information security as a strategic function and as a potential source of competitive advantage.