External interdependencies and organisation purpose rank as key priorities amongst Singapore CEOs in a COVID-19 world
Key post-COVID19 priorities amongst Singapore CEOs
KPMG 2020 CEO Outlook sheds light on the evolving business leadership in a global crisis
- Supply chain risk and return to territorialism have emerged as the top two risks faced by CEOs in Singapore
- A majority of CEOs in Singapore have had to re-evaluate their company purpose; 80 per cent of them are focusing on how to lock in the climate change gains arising from the lockdown
- Nearly half of CEOs in Singapore (48 per cent) are now less confident about prospects for global growth in the coming three years
SINGAPORE, 17 September 2020 – In the wake of the COVID-19 pandemic, CEOs of Singapore’s companies have identified supply chain risk and a return to territorialism as two of the most significant threats to their organisations’ growth over the next three years, indicating a recognition of the country’s inherent external interdependencies. The global pandemic has also created a unique opportunity for reflection and contemplation, with business leaders examining their wider societal contributions and organisational purpose. To provide a unique lens on how the COVID-19 pandemic has reshaped business perspectives and shifted corporate attitudes, KPMG conducted two surveys, one at the onset of the pandemic in January 2020 and another in July/August 2020.
The KPMG 2020 CEO Outlook COVID-19 Special Edition: Singapore Edition finds that businesses are more purpose-focused than before, and this renewed reliance on an organisation’s purpose has contributed to an acceleration of the focus on Environmental, Social and Governance (ESG) efforts. In addressing changes in behaviour and immediate business needs arising from movement restrictions imposed, we have seen the birth as well as acceleration of changes such as, widespread remote working and digital transformation. When reflecting on prospects for growth over the next three years, 48 per cent of CEOs in Singapore are less confident now in the global economy than they were at the start of the year. CEOs, however, are more optimistic (52 per cent confident) about their own country’s growth prospects, and more confident (56 per cent) in the resilience of their own business over the coming three years.
Ong Pang Thye, Managing Partner, KPMG in Singapore, said: “CEOs in Singapore have done well to navigate a period of turbulent change by accelerating their strategies that were already put in place around digital transformation and corporate responsibility. However, given Singapore’s open economy, it is perhaps no surprise that CEOs recognised these external dependencies, resulting in a more conservative outlook on growth prospects on the horizon.”
Supply chain risk named the largest threat to businesses
In Singapore, supply chain risk and the return to territorialism rank as the top two threats to businesses, underscoring the country’s external dependencies. Talent risk, the chart-topper for CEOs globally, takes third place.
Company earnings’ outlook in Singapore
As a result of the economic and geopolitical uncertainties abound and the inherent interdependencies in Asia, CEOs in Singapore are more conservative than CEOs globally – less than a quarter of Singapore business leaders (24 per cent) expect to see their company’s earnings grow at more than 2.5 per cent a year over the next three years. Meanwhile, 35 per cent of CEOs globally anticipate their company’s earnings growth at more than 2.5 per cent a year over the next three years. The comparatively subdued sentiment bears testament to Singapore’s small and open economy.
Digital transformation key to improving operational resilience
CEOs have invested heavily in technology during the lockdown period, which they believe will heighten their companies’ operational-resilience, agility and customer-centricity. A majority of CEOs in Singapore (72 per cent) have seen their new digital business models accelerate during this COVID-19 period. The biggest advancements have been in the digitisation of operations and the creation of a next-generation operating model, where 56 per cent of CEOs in Singapore say that progress has put them years ahead of where they would have expected to be right now. Almost two-thirds (64 per cent) of CEOs are likely to put more capital investment into technology than people.
Increased focus on purpose and ESG
The pandemic has added further scrutiny on business practices, reiterating the importance of organisational purpose and redefining the attributes of good corporate leadership.
CEOs in Singapore feel that the recent developments have made them question if their company purpose meets the expectations of their stakeholders, with 72 per cent saying that they have had to re-evaluate their organisations’ purpose as a result of the COVID-19 crisis, and 80 per cent saying they feel a stronger emotional connection to their organisations’ purpose since the crisis began.
Mitigating climate risks has also evolved into a personal responsibility for business leaders in Singapore. 60 per cent of CEOs in Singapore feel that their ability to manage climate-related risks will impact their role in the organisation, ultimately determining whether they keep their jobs over the next five years.
This development has put ESG near the top of the agenda for CEOs in Singapore and 72 per cent of them have shifted their focus towards the social component of ESG during this period of economic uncertainty.
Ong Pang Thye concluded: “The COVID-19 crisis has inadvertently created a time for people all over the world to reflect and contemplate on what good businesses are, and what strong leadership is about. In this time of great uncertainty, CEOs in Singapore are aware that it is important to use purpose to guide the business decisions that they make. Trust is a valuable quality that results from the alignment of purpose. The trust built between businesses and customers is a huge advantage for businesses when entering the post-COVID-19 era, to build a successful post-COVID-19 future.”
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About KPMG 2020 CEO Outlook
The KPMG 2020 CEO Outlook provides an in-depth three-year outlook from thousands of global executives on enterprise and economic growth.
KPMG initially surveyed 1,300 CEOs in January and February, before many key markets were beginning to feel the full impact of the pandemic crisis. KPMG conducted a follow-up survey of 315 chief executives 6 July - 5 August to understand how CEO thinking has evolved during the crisis. In both instances, all respondents have annual revenue over US$500M and a third of the companies surveyed have more than US$10B in annual revenue.
The January/February survey included leaders from 11 key markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, UK and US) and 11 key industry sectors (asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology, and telecommunications). The recently conducted follow-up survey included CEOs across the industries mentioned above and from eight key markets (Australia, Canada, China, France, Italy, Japan, UK and US). NOTE: some figures may not add up to 100 per cent due to rounding.
The Singapore Edition comprises responses from 25 CEOs spanning a range of industries including Banking, Life Sciences, Asset Management, Insurance and Manufacturing amongst others.
KPMG in Singapore is part of a global network of professional services firms providing Audit, Tax and Advisory services. We operate in 147 countries and territories and have more than 219,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
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