CEOs are feeling more hopeful about their immediate prospects and the actions they need to take now to create capital for investment in future growth.
However, in a challenging market, there remains a focus on short-term returns. Respondents indicated that longer-term ambitions around decarbonisation and the creation of new revenue streams could be attained faster by engaging more effectively with institutional investors and government.
This is according to the latest quarterly EY CEO Outlook Pulse survey of 1,200 global executives and 300 institutional investors that provides insights on boardroom agenda priorities within a rapidly evolving global economic landscape.
Sixty percent of the CEOs surveyed say they are more optimistic about their companies’ revenue growth, with 65% feeling more positive about their business’s profitability. CEO respondents’ views of the outlook for their company and the wider business environment remain relatively unchanged compared with 12 months ago, with some signs of upside potential.
CEOs and investors diverge on sustainability focus over next 12 months
Delivering on broader societal demand to accelerate their sustainability journey is a priority for more than three-quarters (77%) surveyed, and more than half of CEOs globally (54%) see sustainability issues as a higher priority than 12 months ago. However, with a challenging economic environment, nearly one in four (23%) responded that they have deprioritised sustainability with 18% stating that this was due to financial circumstances and a further 5% looking to focus on other boardroom priorities. Investors are pulling back from environmental, social and governance (ESG) issues, with more than a third of institutional investors (35%) saying that sustainability is a lower priority for their investment portfolios than it was 12 months ago.
Technology and AI top strategic priorities
Investing in technology, including artificial intelligence (AI) to improve growth and productivity, is a top priority for nearly half (47%) of CEOs over the next 12 months. Enhancing data management and cybersecurity (45%) and managing end-to-end costs in every aspect of their business (38%) also remain as important strategic priorities for companies.
Dan Saunders (pictured), EY’s Channel Islands Managing Partner, said: “Seeing an increase in investment in emerging technologies is expected given the continued growth of AI and the ongoing cyber security risks businesses face, with CEOs understanding the importance of integrating these challenges into their strategic plans. Now is the time to revisit and refine strategies to navigate through the challenges that lie ahead and ensure Guernsey and Jersey remain leading International Financial Centres for investors.”
CEOs more positive about mergers and acquisitions
CEOs and institutional investors have a positive outlook for mergers and acquisitions (M&A), albeit compared to a subdued deal landscape in 2023. More CEOs are looking to pursue transaction opportunities over the next 12 months, from IPOs, divestments or spin-offs (71%) and joint ventures and strategic alliances with third parties (48%) to M&A (42%), signalling a robust appetite to pursue deals.
When asked what the top strategic drivers were for pursuing acquisitions, the survey found that acquiring technology, new production capabilities or innovative startups (40%), growing market share (33%) and accessing new geographies (32%) stood out as the top three drivers.
Richard Le Tissier, EY’s Guernsey Managing Partner, said: “2023 was a year of transition for many businesses, and it appears 2024 is becoming the year for action. Research shows CEOs are looking for opportunities to drive efficiencies and transform their business for growth in both the short and long-term, with the M&A market seen as a crucial area to address their near-time priorities. Anticipating an increase in activity in the M&A market, which is showing signs of recovery, many are now revisiting their business transformation plans, with emerging technologies and AI at the heart of accelerating growth through new products and services. It’s crucial Guernsey and Jersey remain secure, resilient and stable jurisdictions for conducting new and existing business.”
