A recession or economic downturn has been ranked as the number one external concern for CEOs worldwide this year, according to a new survey by The Conference Board.
More than half (51 per cent) of all CEOs and 60 per cent of those in the US, are bracing for a tepid year ahead and do not expect growth to resume in their region until late 2023 or mid-2024.
Inflation was the second biggest external concern for 2023, followed by COVID-19-related disruptions, global political instability, supply chain disruptions and labour shortages.
Attracting and retaining talent topped the list of internal factors and issues, ahead of driving revenue growth, modifying business models, driving profit growth, accelerating the pace of digital transformation and reducing costs.
“While CEOs globally are looking to contain costs and reduce discretionary spending — actions typically taken during a slowdown — employees may be able to breathe a sigh of relief, as few executives are turning to layoffs,” commented The Conference Board chief economist Dana Peterson.
“Instead, they plan to mitigate risk by accelerating innovation and digital transformation, pursuing new opportunities in higher-growth markets, and revising business models — the three most-cited actions.”
While the war in Ukraine was seen as the fourth biggest external concern for European CEOs and the eighth biggest for Chinese CEOs, it ranked 15th globally and only 22nd in the US.
“The risk of an intensifying war in Ukraine disrupting both the global economy and the world order may be much higher than many CEOs are anticipating,” said Dr Lori Esposito Murray, the president of the committee for economic development of The Conference Board.
“With only 17 per cent of CEOs globally saying their organisations are either well prepared or very well prepared to deal with a crisis involving an expansion of the war in Ukraine, firms need to prepare for the potential ramifications of conflict escalation — even if such events seem unlikely.”
On how the war and its impacts will evolve in the year ahead, 81 per cent of CEOs are expecting more cyber attacks outside of the conflict. Worsening energy (68 per cent) and food (65 per cent) crises and more economic sanctions (68 per cent) are also anticipated.
An economic slowdown or recession will not have a significant impact on sustainability-related spending for 38 per cent of CEOs globally and 55 per cent of those in the US.
Additionally, ESG backlash will not have a significant impact on sustainability-related spending, according to 59 per cent of global CEOs and 71 per cent of US CEOs.
Paul Washington, executive director of The Conference Board ESG Centre, said that the resilience of ESG in spite of an economic slowdown and backlash was due to a few factors.
“First, environmental and social responsibility remain priorities for key stakeholders, including investors, employees, consumers, business partners, and many regulators in the US and EU,” he explained.
“Second, ESG is increasingly being built into — not bolted onto — business strategy and operations. It is a source of opportunity, not just risk. Third, it reflects a focus on the long term: CEOs recognise how truly sustainable economic growth and acting in a socially and environmentally responsible manner go hand in hand.”
The survey also found that 46 per cent of global CEOs believe that climate change is currently significantly impacting their business or is expected to do so within the next five years.
