Navigating a world in motion
For today’s CEOs, there’s no time for autopilot. With the economic and political landscape in constant flux and new technologies poised to change the rules of the game, organizations need alert leadership with a wide-angle lens. According to our survey, Luxembourg’s CEOs feel this added pressure to ensure the long-term prosperity of their companies by effectively managing the threats and opportunities linked to digitalization and new technologies.
Perhaps more than ever, today’s CEOs have to keep one eye on their organizations and the other on the world around them—a world in which each morning seems to bring another major geopolitical or technological event.
As CEOs calibrate and recalibrate to a landscape in perpetual motion, they anticipate unprecedented challenges but also, new opportunities. The results of Luxembourg’s KPMG CEO Outlook paint a picture of leadership that expects growth, foreseeing active recruitment and M&A efforts.
Along the way, they’ll face hurdles unique to our times, citing challenges related to cybersecurity, tech talent and emerging technologies. While working to mitigate these risks, organizations are simultaneously prioritizing generative AI, digitalization and connectivity as avenues to continued growth.
In more predictable times, CEOs may have been able to set their coordinates and steer the course. The coming years, however, will be a different story, demanding vigilant and proactive leadership.
In its tenth year of publication, the KPMG CEO Outlook continues to give a valuable peek into the minds of the world’s influential business leaders. We gathered insight from over 1,300 CEOs representing diverse industries and markets, including Luxembourg. Here are our key findings.
Throughout this year’s KPMG CEO Outlook, respondent growth confidence shines through across the globe—from employment stability to M&A plans to expected earnings. The majority of Luxembourg CEOs remain confident in the growth prospects of their company, their industry and the Grand Duchy as a whole. However, given continued volatility, their confidence in the global economy has halved since 2023. CEOs are mostly unworried about the negative impacts of changing working patterns, overwhelmingly foreseeing a return to in-office environments. Perhaps because no Luxembourg respondents plan to leverage outsourcing as a strategic pillar, competition for talent remains omnipresent. Across Luxembourg in particular, the risks and opportunities related to cybersecurity and new technologies have the full attention of leadership.
Regional confidence among LU CEOs over next three years
- 80% Confident or very confident in growth prospects of Luxembourg
- 70% Confident or very confident in growth prospects of global economy
Organizational growth expectations among LU CEOs over next three years
- 100% Expect increase in headcount
- 90% Confident or very confident in growth prospects of company
- 80% Foresee growth of at least 2.5% per annum
What is your organization's earnings outlook over the next three years?
- 0.01 - 2.49% per annum10%
- 2.5 - 4.99% per annum80%
- 10 - 19.99% per annum10%
Top threats to growth over the next three years
Luxembourg
- Cybersecurity
- Political uncertainty
- Emerging/disruptive technology
- Regulatory
Globally
- Supply chain
- Operational
- Cybersecurity
- Political uncertainty
In the face of climate change, a global recession, new technologies and geopolitical turbulence, 100 percent of the CEOs we surveyed in Luxembourg have either already adapted their growth strategies or plan to adapt them. They report a rising pressure to ensure their businesses' long-term prosperity as they navigate uncharted innovations.
Top operational priorities for growth over next three years among LU CEOs
- Understanding and implementing generative AI (includes upskilling)
- Inflation proofing capital and input costs
- Advancing the digitization and connectivity of functional areas
- Organic growth
Luxembourg’s M&A appetite over next three years
- 100% Moderate to high M&A appetite
High appetite for M&A doubled from last year (2023 vs 2024)
- 51%Global
- 30%Luxembourg
2023
- 45%Global
- 60%Luxembourg
2024
High appetite for M&A - Likely to undertake acquisition which will have a significant impact to my overall organization
ESG implementation carries widespread impacts for organizations—driving customer relationships, positive brand association, employee engagement, operational and investment strategies, and talent acquisition. In Luxembourg, the majority of respondents have fully embedded ESG into their businesses as a means to value creation, noting that ESG failure threatens competitive edge, CEO tenure and fundraising. Half are confident that they can meet net zero goals, citing challenges like the complexity of decarbonizing supply chains and a lack of appropriate technology solutions. In Luxembourg and around the world, CEOs expect to see a significant rate of return for ESG investments in three to five years. Luxembourg respondents were twice as likely as global respondents to list new customer relationships and positive brand association as the areas in which ESG strategies will have the greatest near-term impact. Like global CEOs, the majority of Luxembourg’s leadership view C-suite gender equity as critical to growth.
Net zero outlook in Luxembourg
- ½ Confident they can meet net zero goals by 2030
- ½ Principal downside to missing ESG expectations is competitors gaining an edge
Biggest barriers to achieving net zero or similar climate ambitions
Luxembourg
- Complexity of decarbonizing supply chains
- Lack of appropriate technology solutions
Globally
- Complexity of decarbonizing supply chains
- Lack of skills and expertise to implement solutions
Diversity views among LU respondents
- 0%Workplace diversity requires change across senior leadership
- 0%C-suite gender equity is critical to helping ensure organizations meet growth ambitions
- 0%Progress on diversity and inclusion has moved too slowly in the business world
- 0%Scrutiny over diversity performance expected to increase over next three years
Strategy stance among LU CEOs
- 70% ESG is embedded into the business as a means to value creation
- 70% Organizations should invest in community skill-building efforts to ensure future talent
- 70% Failure of climate change adoption will negatively impact organization’s prosperity
- 40% Have the capability and capacity to meet new ESG-related reporting standards
2015
Globally, CEOs ranked environmental risk as their least concerning priority
2024
Almost a quarter said that, as the main downside, failing to meet ESG objectives would give their competitors an edge
Globally, CEO generation linked to level of confidence to take on ESG scrutiny
- 43% of leaders aged 40-49
- 33% of leaders aged 50-59
- 30% of leaders aged 60-69
In Luxembourg, surveyed CEOs revealed a 50-50 split in investment priorities across both new technology and workforce skills development. This highlights their understanding that innovation is not just driven by technology, but by the people behind it. Fifty percent of LU CEOs feel equipped to upskill their employees to leverage the benefits of AI, specifically. All of them acknowledge the moderate to high impact that an aging labor market, among other shifts, has on recruitment, retention and culture. Simultaneously, between this ageing workforce and the next generation of employees lies an ever-growing expectation gap. The vision of an eventual return to office persists, despite evidence suggesting that successful organizations are those that evolve with employee expectations, which today center around work-life balance, flexibility and cost of living.
Factors with the largest impact on LU companies
- Widening expectation gap between ageing employees and next-generation employees
- Number of employees retiring coupled with lack of skilled replacements
- Knowledge transfer between employees
- Differences and tensions resulting from corporate responses to social and global issues
Luxembourg’s labor market
- 100% Say aging workforce has moderate to high impact on recruitment, retention and culture
- 70% Agree that organizations should invest in skills development and lifelong learning in communities to safeguard access to future talent
Views of LU CEOs on talent over next three years
- 40% Competition for talent is top of mind
- 30% Talent will negatively impact organization’s prosperity
- 0% Outsourcing will be a major part of strategy
Capital investment split between technology and skills
- 59%Global
- 50%Luxembourg
We are placing more capital investing in buying new technology
- 41%Global
- 50%Luxembourg
We are placing more capital investing in developing our workforce's skills and capabilities
Return-to-office expectations remain, increasing both globally and in Luxembourg
- 83%Global
- 100%Luxembourg
In-office
Return-to-office expectations correlated to CEO age bracket
- 75%40 to 49
- 83%50 to 59
- 87%60 to 69
CEOs continue to buck the trend when it comes to the hybrid versus return-to-office discussion. We know that today’s workforce values the flexibility and quality of life enabled by hybrid and remote policies. In the competition for talent, organizations that evolve with these wishes position themselves for success.
When it comes to implementing generative AI, Luxembourg respondents listed time of implementation, employee adoption and ethical challenges as the leading hurdles. Contrary to public concerns, these CEOs do not believe generative AI will hinder job opportunities, also showing a slight decrease in concerns over job redundancy compared to last year. However, they note the need for upskilling and a reallocation of resources. IT emerged as the area in which Luxembourg CEOs plan to invest the most in generative AI over the next three years. An increasing number of them listed generative AI as a top investment priority, also noting that AI’s successful integration hinges on building a culture centered on cybersecurity.
AI benefits and challenges in Luxembourg
- 70% AI is a top investment priority
- 70% Experimentation is key to unlocking generative AI’s potential
- 100% IT identified as area for top investment in generative AI
AI ties for top-of-mind challenge among LU CEOs:
- The race to embrace generative AI and other technologies
- Economic uncertainty
Top benefits of generative AI in Luxembourg
- New product and market growth opportunities
- Increased innovation
- Increased efficiency and productivity
AI skills and employment in Luxembourg
- 50% Technical capability and skills to implement AI present slight challenge
- 0% Generative AI will impact the number of jobs within their organization
- 90% Impacts of generative AI on company culture is not a concern
- 76%Global
- 100%Luxembourg
AI will not fundamentally impact the number of jobs but will require upskilling and existing resources to be redeployed
Cybersecurity outlook among LU CEOs for next three years
- 70% Well or very well prepared for a future cyber attack
- 80% Confident they can access the talent and solutions to defend against AI threats
- 70% Increasing cybersecurity investment to protect against AI threats
- 90% Say building a cybersecurity-focused culture is central to how they integrate AI into organization
- 70% Agree or strongly agree that cybercrime and cyber insecurity will negatively impact organization’s prosperity
- Cybersecurity risk listed as greatest threat to growth
Top areas for generative AI investment over next three years
Top areas for generative AI investment in LU over next three years?
- 10%
Risk management
- 10%
Strategy
- 50%
Research and development
- 10%
Manufacturing
- 30%
Finance and accounting
- 20%
Engineering
- 100%
Information technology
- 70%
Sales and marketing
Economic Outlook and Business Confidence
- Expect to see leadership keen on M&A opportunities and confident in growth despite geopolitical and economic volatility
- While we see overall confidence as a theme among global CEOs, Luxembourg respondents show particular belief in their own organization, industry and home country
ESG
- CEOs acknowledge diversity and inclusion as drivers of growth
- While strategies reflect ESG commitments, significant hurdles, such as the complexities of decarbonizing supply chains and lack of technological solutions stand between organizations and ESG goals
Talent
- Respondents, globally and in Luxembourg, strongly envision a shift back to in-office work environments over the next three years
- CEOs recognize the impacts of an aging workforce, particularly on company culture, and a growing expectation gap between generations
Technology and Generative AI
- While LU leadership is mostly confident in its organization’s ability to safely deploy generative AI, only 30% believe that its workforce currently has the necessary skills, and half show confidence in their ability to equip them with those skills
- The majority of CEOs in Luxembourg believe they are well-prepared or very well-prepared for future cyber attacks
KPMG combines deep industry insight and expansive multidisciplinary know-how, partnering with clients to meet their challenges and identify opportunities.
Methodology
About the KPMG 2024 CEO Outlook
The 10th edition of the KPMG CEO Outlook, conducted with 1,325 CEOs between 25 July and 29 August 2024, provides unique insight into the mindset, strategies and planning tactics of CEOs.
All respondents have annual revenues over US$500M and one-third of the companies surveyed have more than US$10B in annual revenue. The survey included leaders from 11 markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, the United Kingdom and the United States) and 11 key industry sectors (asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology and telecommunications).
NOTE: Some figures may not add up to 100 percent due to rounding.
Disclaimer
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. KPMG LLP does not provide legal services.
The information contained herein is not intended to be “written advice concerning one or more Federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.
