How CEOs intend to continue to grow through uncertain times

CEOs are taking a measured approach to an uncertain market, intent on making the right strategic investments that deliver long term value and growth.

In brief

• CEOs are adapting their investment to meet a challenging environment.
• The geopolitical environment and regulatory trade and investment policies has overtaken other concerns.
• Many organisations are taking a long-term view in their investment plans.

CEOs continue to have strong determination to act decisively and forge ahead delivering growth and competitive advantages for their business, despite a uniquely challenging economic environment.

Based on an in-depth survey of CEOs of the world’s leading companies across the Americas, Asia-Pacific, and Europe, the EY CEO Outlook Pulse provides valuable insights on the main trends and developments impacting business leaders.

97% of CEOs have altered their planned investment strategies in response to global turbulence, with almost a third (32%) halting a planned investment.

Specific actions include delaying a planned investment until the situation improves (44%); supply chain reconfiguration (41%); relocation of operational assets (36%); and exiting businesses in certain markets (34%).

The volatile geopolitical environment has curtailed the era of relatively liberalised global trade, at least for now. Restrictive regulatory trade and investment policies have overtaken COVID-related issues as the key reason for altering international investment plans.

Indeed, 52% of CEOs cited restrictive trade policies and political policy uncertainty as key drivers behind their decisions to alter strategic investment plans. Just 19% pointed to pandemic related issues.

The pandemic continues to loom large in CEOs’ thinking when it comes to risks for future growth, however, 32% of respondents considered a continuation or return of pandemic-related disruptions as a key threat to growth. Other concerns include uncertain monetary policy direction, increasing cost of capital, higher input prices and inflation, increasing cybersecurity risks; a further increase in geopolitical tensions; and the regionalisation and fragmentation of the global economy.

28% considered climate change impacts and pressures to build sustainability to be among the greatest risks.

The findings of the EY CEO Outlook Pulse survey point to a two stranded response to these challenges on the part of CEOs. Firstly, they are tackling the immediate issues through increased investment in internal functions such as finance, accounting, and supply chain, and logistics as well as in marketing and customer experience.  Secondly, CEOs are taking a longer-term view and investing in sustainability, including net zero and other environmental issues, as well as societal priorities. That longer horizon is also evidenced by intentions to continue investment in digital transformation, innovation and R&D, cybersecurity measures, and talent development.