Widening income inequality, fraying social safety nets and economic insecurity due to technology change are driving populist movements. Climate change is causing new waves of immigration. Gender inequality is driving vulnerability and marginalization of populations and depressing potential economic growth. Digital technologies are creating new challenges around data ownership, privacy, ethics and trust. These challenges lie beyond the ability of any one nation or any one set of stakeholders to address.
Global challenges pose growing negative consequences for economies, businesses and societies if they are not tackled. However, there will be measurable upsides if they are addressed. For example, the United Nations reports that countries are leaving US$160 trillion in wealth on the table globally due to differences in lifetime earnings between women and men. Coincidentally, the adoption of renewable energy globally could save an equally astronomical sum—US$160 trillion in climate change costs by 2050.
Historically, most business CEOs have chosen to remain noncommittal with respect to global challenges, particularly those that are sources of political friction. Now, we have come to a tipping point of change as the CEOs of global companies, their board directors and institutional investors align on the need for corporate action and, most importantly, CEO leadership on these issues.
“Today, we are facing a whole series of global challenges: the fight against climate change and social injustice is at the top of the agenda. The challenges must first be recognized and named openly. This is the central prerequisite for us being able to find the right answers and define long-term goals,” observes Oliver Blume, CEO of Porsche AG.
The biggest risks to business and the global economy
CEOs, board directors and institutional investors put two global challenges at the top of their lists of issues threatening business growth and the global economy:
- National and corporate cybersecurity
- Job loss due to technology change and the associated issues of education and reskilling
These represent immediate disruptions, which influence the future of work, consumer trust and regulation.
“Future corporate growth depends on trust, whether between corporations and customers, people and technology, or management and employees. The increasing risk of cyber-attacks and the failure to find the right balance of digital and human in the workplace damages trust in all these critical dimensions,” says Gil Forer, EY Global Markets Digital and Business Disruption Lead Partner, and EYQ leader.
CEOs also emphasize income inequality, likely influenced by the impact of this issue on their customers as well as the political volatility it is driving.
Board members prioritize the ethics of AI as they grapple with questions of bias and trust raised by this new technological capability.
Investors put climate change at the top of the list. This group has long sounded the alarm about the risk to long-term value from climate disruptions, which are becoming increasingly evident.
“Climate change, geopolitical instability and conflict, youth unemployment, lack of education, digitalization and inequality are some of the global challenges that business leaders are and will need to grapple with in the short- to medium-term,” notes Isam J. Al Sager, Group CEO of the National Bank of Kuwait.