Energy leaders focus on talent and technology as uncertainty continues

• More than a third of energy leaders now view climate risk as the greatest threat to their organization’s growth
• Almost a third of CEOs view attracting and retaining talent as their top priority
• Majority of energy CEOs planning to increase investment in innovative technologies

Leaders of the world’s largest energy sector businesses are focusing their investments on talent and technology as the industry faces continued uncertainty from COVID-19 and the climate crisis, according to new research from KPMG.

KPMG’s 2021 CEO Outlook asked 1325 CEOs across different sectors and specifically 133 energy chief executives about their strategies and outlook over a 3-year horizon. The latest survey reveals an industry that remains resilient and focused on long-term, sustainable growth, despite facing an uncertain future and witnessing a period of rapid transition.

With COP26 a matter of weeks away, the latest survey findings reveal energy CEOs are increasingly concerned about both climate risk and an emerging talent crisis within their sector.

Climate change risk continues to be the top threat for energy leaders, with 37% of energy CEOs choosing it as their top risk category as it relates to their organization’s growth. This was substantially higher than any other industry surveyed.

Meanwhile, more than half (63%) of CEOs report the lion’s share of demand pressure stemming from investors and regulators for increased reporting and transparency on ESG issues today, and 27% say their top operational priority will be ensuring ESG reporting is integrated into their future measurement and reporting processes. 84% said they want to lock in the sustainability and climate change gains they’ve have made as a result of the crisis.

Nearly half (46%) of the CEOs state their single biggest challenge is crafting their ESG narrative in a compelling fashion and that this is most critical for keeping employees engaged. Over half (56%) report their pay is already tied to ESG performance with 85% indicating the annual bonus as the key mechanism.

The ‘war for talent’ emerged front and center for energy CEOs as a top operational priority, with 29% highlighting attracting and retaining talent as key to achieving their growth objectives over the next three years. Attracting and retaining talent also appears to be driving up recruitment, with 86% of energy leaders planning to increase their headcount over the same period.

Meanwhile, more than a quarter of CEOs believe the greatest benefit of being a diverse and inclusive organization is the ability to attract talent, including Gen Z and millennials – the highest response rate in that category.

The acceleration in new working practices and a greater focus on wellbeing is also driving energy CEOs to think differently about talent, with almost half (43%) focusing on employees’ mental health and wellbeing as the key success factors to ensure employees are engaged, motivated and productive in a world where hybrid working is increasingly common.

Another key area of focus for energy leaders is investment in technology and innovation to help unlock long-term growth. 86% of energy CEOs see technological disruption as more of an opportunity than a threat, indicating a strong sense of optimism around tech innovation and the impacts to come.

Collaboration is also playing a key role in driving the industry’s focus with more than half (59%) of CEOs planning to join industry consortia focused on development of innovative technologies and more than a third (37%) looking to collaborate with innovative start-ups such as FinTech, InsurTech or HealthTech firms. Meanwhile, 50% of CEOs are looking to set up their own accelerator or incubator programs.

There also remains a consistent appetite for strategic market activity and investment in new growth opportunities. 26% of industry leaders say M&A will be a part of their strategic objectives over the next three years, while more than a third (31%) of CEOs are exploring strategic alliances with third parties, and a quarter (25%) are considering organic growth options, such as innovation, R&D, capital investments, new product development and recruitment.

Click here to read the Energy & Natural Resources summary from KPMG’s 2021 CEO Outlook.

Brian O’Neill, Senior Manager, Global External Communications
+44 7823 668 689
Brian.O’Neill@kpmg.co.uk

The energy & utilities data is a sub-sample of data from KPMG’s CEO Outlook, using survey findings from 133 CEOs working in energy, natural resources and utilities. The KPMG 2021 CEO Outlook asked 1,325 CEOs from among the world’s most influential companies to provide their 3-year outlook on the economic and business landscape, as well the impact that the on-going COVID-19 pandemic will have on their organizations' future. All respondents have annual revenue over US$500M and a third of the companies surveyed have more than US$10B in annual revenue. The survey was conducted June 29 – August 6 and 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).

KPMG is a global organization of independent professional services firms providing Audit, Tax and Advisory services. We operate in 146 countries and territories and in FY20 had close to 227,000 people working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.