“CEOs are balancing taking defensive action on short-term pressures with longer-term imperatives,” Andrea adds. “By far the most compelling immediate actions are around technology to improve growth and productivity, as well as boosting data management and cybersecurity to protect themselves from cyber threats. There remains a keen focus on managing end-to-end business costs, which has become a critical focus of investors, even as economic conditions, including inflation and input costs, have tempered.”
While digital transformation takes centre stage, CEOs are also grappling with the imperative to manage costs effectively, with the survey revealing that 38% of respondents cited end-to-end expense management as a strategic priority.
M&A a pathway to innovation, accelerating growth
EY’s survey also reveals CEOs have a positive outlook on M&A as a means to accelerate technology investments. Almost half (42%) said they expect to pursue acquisitions over the next 12 months, with 40% citing acquiring innovative tech startups as the top strategic driver.
“CEOs are looking at M&A as a key lever to address their near-term priorities,” Andrea says. “CEOs do need to look beyond the short-term efficiency and mid-term productivity gains that AI promises. One priority three years out is revenue growth. But the potential for emerging technologies and AI to accelerate growth through new products and services or accessing adjacent or new markets needs to be activated now.”
Sustainability takes a backseat amid challenges
Companies today are being held more accountable when it comes to sustainability by customers, employees, shareholders, governments and even regulators. But while over three-quarters (77%) of CEOs view sustainability as a priority, nearly one in four (23%) have actually deprioritised environmental and social governance initiatives in the current climate. This contrasts with institutional investors, 35% of whom say sustainability is less of a focus than a year ago.
“A misalignment in priorities between short-term financial returns at the expense of achieving sustainability targets more swiftly may be shortsighted,” Andrea comments. “Although it’s reassuring to see that CEOs remain positive about their business outlook with many remaining committed to accelerating or delivering on their decarbonisation targets, the fact that nearly one in four CEOs are moving sustainability down their business agenda is disappointing for those who look to companies to set the tone of this topic.
“Achieving sustainability targets can be challenging, particularly in a difficult, cost-focused market, but the thrust toward a sustainable future is not just a financial and business imperative but a shared commitment across the corporate world.”
