EY 2022 CEO Outlook Survey analyses the main economic and business trends impacting Irish CEOs’ decision making
- Irish CEOs are feeling more confident about the future, with more than half (56%) expecting their company will pursue acquisitions in the next 12 months and,
- Almost half (47%) plan to invest more heavily in their core business over the next five years
- ESG among the top three considerations for Irish CEOs, with sustainability goals having a major impact on a company’s investment agenda
Dublin, 01 April 2022 - Irish businesses are emerging stronger from the COVID-19 pandemic than their global counterparts, according to the EY 2022 CEO Outlook Survey. Over a third (37%) of Irish CEOs surveyed said their businesses have been reshaped positively in some form by the pandemic, compared with just 13% globally. The findings suggest Irish businesses may be adapting faster to the pandemic recovery than in other geographies, putting them in a stronger position to capitalise on new growth opportunities in the year ahead.
In this fast-changing business landscape, Irish CEOs are feeling more confident about the future, than their global counterparts, with 47% saying they plan to invest more heavily over the next five years to sustain, improve and extend their core business, compared to just 41% of global CEOs.
The survey also found that Irish CEOs are placing slightly more emphasis on investing in existing businesses to accelerate organic growth, followed by investing in digital transformation to position them for the future.
Digital transformation & technological change was cited among the top opportunities driving organisational change in the eyes of Irish CEOs, with 20% in the survey seeing it as the number one driver.
M&A will continue to be a key growth driver in 2022
Following last year’s bumper M&A activity, and with the Irish economy expected to grow in 2022, the market backdrop is set to provide bountiful M&A transaction opportunities to companies across multiple sectors. The survey found that more than half (56%) of Irish CEOs expect their company to pursue acquisitions in the next 12 months. Of these, half (52%) indicate they will be looking for assets that either increase operational capabilities or make bolt-on acquisitions that grow market share.
Environmental, Social and Governance (ESG) criteria are also having more of an impact on M&A and investment strategies for Irish companies, with all respondents confirming sustainability factors are driving their M&A agenda in some form, particularly when it comes to reducing the risks of ESG-related regulatory costs.
Last year, M&A was the CEO accelerant of choice for strategic ambition. Despite the record-breaking year for transactions, 97% of Irish CEOs said they either failed to complete or cancelled a planned deal in the last 12 months. This was primarily due to the impact of the pandemic, or because of regulatory or government bottlenecks. Additionally, while M&A may be a favoured tool for accelerating growth, 42% of Irish CEOs indicated that they plan to reshape their businesses through organic investment.
Considering geopolitical risks
Beyond the pandemic, and prior to the onset of current global disruptions, Irish CEOs were mindful of geopolitical risks when considering their future growth strategies, according to the survey. Increasing geopolitical tensions, supply chain disruptions, trade conflicts, and protectionism represent the most critical risk factors to the future growth strategies of Irish companies, the survey revealed.
For example, 94% of Irish CEOs in the survey said they were already reconfiguring their supply chains, primarily to manage geopolitical risks, while a quarter (24%) of respondents are increasing supplier numbers to boost resilience and reduce uncertainty. When it comes to international trade, 73% of Irish CEOs said they were reconsidering their cross-border investments in response to increasing geopolitical tensions.
Graham Reid, EY Ireland Partner and Head of Markets, says:
“Following two years of intense disruption to both life and business globally, current geopolitical disruption has reverberated across global markets resulting in escalating energy prices, shortages of key commodities, and massive supply chain disruptions.
“Even though our survey was conducted at the end of 2021, the results remain valuable as they reveal a future-facing mindset among CEOs of leading Irish organisations who are looking beyond short-term pressures to invest in long-term value creation. They are reframing their investment strategy for growth in an ever-changing business landscape.”
Focusing on ESG
Irish CEOs identify environmental, governance and social (ESG) criteria within their top three priorities, with all those surveyed identifying ESG as a vitally important value driver for their organisation.
More than one third (37%) say the primary driver of their sustainability strategy is to address pressure from governments, regulators, and society.
On the other hand, despite investors’ enthusiasm to explore the full potential that a sustainability agenda can offer, 83% of Irish CEOs have experienced resistance to implementing some ESG measures. Of these respondents, 40% said their investors and shareholders would prefer to wait until they see competitor strategies in their sector before moving ahead, while more than half (52%) say they had pushback from either a minority or majority of investors who are not yet convinced about the cost and potential benefits of certain elements of their ESG agenda.
While 22% of the Irish respondents said improving the environmental impact of their companies’ activities was one of the top objectives; a further 18% said they were fulfilling these goals by improving diversity and inclusion in their companies.
Graham Reid commented:
“The pandemic has brought about very recognisable changes that are here to stay in the medium to longer term, in particular with regard to the way many of us interact or communicate with clients, to how we shop online, or how we ensure a better work-life balance for our workforce. Companies need to react proactively to these developments to maintain and gain market share. Post pandemic our world is facing many other challenges such as rising geopolitical tensions and climate change and corporates need to react decisively to these developments to remain at the forefront of their respective industries.”
Notes to Editors
About the survey
The new CEO Outlook Survey captures perspectives from leading CEOs across the globe. It aims to understand their views on critical, strategic issues and provides a realistic picture of risks and opportunities as well as emerging trends.
Between November and December 2021, Thought Leadership Consulting – a Euromoney Institutional Investor company – surveyed a panel of more than 2,000 CEOs in 53 countries and across 14 sectors. There were 30 Irish respondents.
The EY 2022 CEO Outlook Survey is the benchmark of CEOs’ sentiment on global challenges, growth and sustainability strategy, portfolio optimisation and M&A. The analysis discusses what it means for CEOs to reset the risk radar, reframe their future strategy, and thrive in a radically different environment.
The CEO Outlook Survey is part of the CEO Imperative Series, which provides critical answers and actions to help CEOs reframe the future of their organisation. For more insights into this series, visit website here.
EY exists to build a better working world, helping create long-term value for clients, people and society and build trust in the capital markets.
Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate.
Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.
EY refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data, and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com.