CEOs around the world today operate in an environment characterised by multiple simultaneous challenges: the impact of climate change, global conflicts, protectionism, economic and geopolitical uncertainties, human resource shortages and disruptive technologies.
What strategies are CEOs using to successfully navigate their organisations through this complex environment? This is what we investigated in our survey for the CEO Outlook 2023. We surveyed 1,325 CEOs of large companies worldwide, including 125 CEOs in Germany. Below you will find some core results.
Economic outlook between uncertainty and confidence
Eight out of ten CEOs in Germany are confident that their companies will continue to grow in the next three years. However, this figure is ten percentage points lower than in the previous year. A differentiated picture also emerges for earnings growth: 49 per cent of the CEOs surveyed expect negative to low (less than 2.5 per cent) annual earnings growth over the next few years. Only 18 per cent expect annual earnings growth of more than five per cent. This shows that German companies are still struggling with difficult conditions.
With regard to the development of the global economy over the next three years, 80 per cent of company bosses in Germany are confident. With regard to Germany's development, 75 per cent are confident. However, this is four percentage points less than in the CEO Outlook 2022.
Mattias Schmelzer
CEO, Chairman of the Managing Board
KPMG AG Wirtschaftsprüfungsgesellschaft
Challenges due to current framework conditions
CEOs in Germany surveyed by KPMG identify disruptive technologies, geopolitics and climate change as the three most important risks to their company's growth prospects.
Which of the following risks poses the greatest threat to your organisation's growth over the next three years?
Risks from new disruptive technologies
Geopolitical uncertainties
Environmental risks and climate change
Regulation
Generative AI has top priority for investment
In companies, generative AI (GenAI) is rated as an important competitive advantage for the future. 76 percent of the CEOs surveyed in Germany make this new technology one of the most important investment priorities. 43 percent expect the investment to pay off in the next three to five years, 37 percent expect it sooner. 19 percent expect payback only after more than five years.
The most important benefits of generative AI cited by CEOs are increased profitability (26 percent), followed by higher efficiency and productivity through automated processes (21 percent).
At the same time, CEOs are concerned with a number of challenges in connection with generative AI. These include implementation costs in particular, but also ethical issues, technical capabilities for implementation and insufficient regulation. 59 percent are of the opinion that the extent of regulation of GenAI should be oriented towards climate commitments.
84 percent of CEOs in Germany see GenAI as a double-edged sword: while it could help detect cyber attacks, it could also bring new dangers through new attack strategies for attackers. This is worrying in view of the fact that only 55 percent of CEOs consider their company to be well armed against cyber attacks.
ESG investments will only pay off in a few years' time
The abbreviation ESG, which encompasses the three areas of environmental, social and governance, has long since become part of everyday business parlance. ESG is a decisive factor for the long-term success of a company. Our survey shows that CEOs continue to see the three areas as challenges to their own growth and therefore prioritise ESG. Executives have recognised that ESG issues also represent opportunities for increasing the value of the company. A large proportion of respondents firmly believe that their ESG investments will pay off in the coming years.
77 per cent of the CEOs of German companies we surveyed have fully integrated ESG into their business in order to generate added value - globally, the figure was only 69 per cent. The majority assume that it will take three to five years before they see a return on their ESG investments.
13 per cent of CEOs in Germany see environmental and climate change risks as the biggest risk cluster that could jeopardise growth targets for the next three years. This is followed by disruptive technologies (17 per cent) and geopolitical conflicts (16 per cent). The implementation of ESG initiatives is the top priority for seven per cent of managers in their operational measures to achieve growth targets.
CEOs expect return to the office
68 per cent of the CEOs surveyed in Germany expect their employees to return to the office completely within the next three years. Only 25 per cent expect hybrid work. 77 per cent believe that they are likely to reward employees who make an effort to come to the office - for example, with preferential assignments, salary increases or promotions.
56 per cent agree that talent will negatively impact their organisation's wealth over the next three years, compared to 68 per cent globally.
