68% of global CEOs state that current ESG progress is not strong enough to withstand potential scrutiny

ESG is increasingly being recognized by CEOs for what it is: an indispensable part of their corporate strategy that helps ensure their business is resilient and can deliver long-term growth — even when faced with numerous geopolitical and economic challenges.

Despite a polarizing debate surrounding the term ESG, CEOs recognize that it remains an integral part of their business operations and corporate strategies — and are taking a more outcomes-based approach. More than two-thirds (69 percent) of global CEOs have fully embedded ESG into their business as a means to create value. It is also important to note that 35 percent of CEOs say they have changed the language they use to refer to ESG both internally and externally, reflecting a shift in the dialogue about ESG and signaling a trend toward prioritizing the areas that make the most sense for their organizations.

While global CEOs believe they are still a few years away from seeing a return on their ESG investments, they recognize the importance it has with their customers and on their brand. Nearly a quarter (24 percent) believe that, over the next three years, ESG will have the greatest impact on their customer relationships, and a further 16 percent believe it will help build their brand reputation.

Global CEOs are keenly attuned to new regulations and shifting politics when it comes to ESG. Despite this, 68 percent indicate that their current ESG progress is not strong enough to withstand potential scrutiny from stakeholders or shareholders. The difficulty in balancing progress with business growth is further supported in our ESG Assurance Maturity Index, where more than half of senior executives that consider themselves ready for ESG assurance said it was a challenge to balance assurance goals with the profit expectations of shareholders.

- Sustainability continues to rise on the CEO agenda and is increasingly recognized as a key driver for value creation, making it a strategic priority for global CEOs. Despite this, a majority of CEOs state that their current sustainability progress is not strong enough.  Accelerating sustainability efforts and continuing to embed sustainability into the business as a key value driver will be success factors to deliver long-term growth and competitiveness, comments Amanda Abele, Manager within sustainability advisory at KPMG.

Read more about the report here: KPMG 2023 CEO Outlook - KPMG Global.