The CEO Imperative: How can UK companies transform to build a sustainable future?

By Steve Ivermee

UK&I Managing Partner Strategy and Transactions, Ernst and Young LLP

Member of the UK&I Executive working with multi-disciplinary teams to advise and support clients on the transaction life cycle. Lead UK&I Diversity & Inclusiveness Sponsor. Budding racing driver.

6 minute read 28 Feb 2022

It’s hard to overstate the challenge facing UK CEOs, as they look to overcome short-term pressures whilst focusing on long-term value.

In brief
  • UK CEOs recognise the need to reshape their business to build long-term value.
  • Environmental, Social and Governance (ESG) is one of the biggest strategic challenges for UK CEOs, but most companies have encountered investor resistance.
  • M&A remains a critical strategic option to respond to rapid change.

The inaugural EY CEO Survey 2022 reveals how the pandemic has become a significant catalyst for corporate transformation in the UK, interacting with existing trends, accelerating change, and throwing up new challenges that CEOs can’t ignore. Over 90% of UK respondents said that COVID-19 had affected their sector and over a third expected this change to be fundamental. Alongside this imperative for change, CEOs are also handling many other strategic challenges. Working out how to manage risk and balance complicated, and often conflicting demands on capital and time, will be critical to success. 

The EY CEO Survey 2022 provides insight into the most significant issues UK CEOs face and how they are putting their organisations on a path toward a more sustainable future. Three areas stand out as strong priorities for UK CEOs in the year ahead.

Female entrepreneur with digital tablet looking away while crouching by plants in nursery
(Chapter breaker)

Chapter 1

Reshaping to protect and grow

CEOs are responding to the pandemic, whilst taking bold decisions to build long-term value.

CEO responses to the survey highlight the rapidity with which new issues have arisen in the last 12 months. Energy prices, supply chain disruption, and rising material and labour costs became major problems for companies in a matter of months in 2021. Almost every UK CEO in the survey reported an increase in costs and the need to adjust their supply chain. This echoes the latest UK Profit Warning analysis by EY, which also shows record levels of downgrades triggered by cost and supply chain issues. 

Input prices


of UK CEO respondents said that their companies had experienced a significant increase in input prices.

CEOs are taking action to mitigate against this explosion of short-term pressures, whilst also maintaining their focus on a longer-term horizon. Over 50% of UK CEOs are using technology investment as their main strategic driver to improve margins, either through automation or technologies that increase customer engagement to develop new data-driven products and services. The last two years have highlighted the short-term need to secure supply for business continuity, but they have also shown that reshaping supply chains can create a long-term competitive advantage by improving visibility, agility, and sustainability. 88% of UK CEOs say that their companies are adjusting their supply chains or geographical profile — with over a third accelerating cross-border investment.

This last figure underlines the continuing willingness of UK CEOs to make bold moves in the face of uncertainty and continuous change. In addition, over 50% of UK CEOs also indicate that they’ll be directing capital investment towards their organisation’s growth engines or entirely new ideas in the next five years. 

Car charging point
(Chapter breaker)

Chapter 2

Resolving the tension between ESG and stakeholder priorities

ESG focus is integral to CEOs’ plans to build long-term value, but investors aren’t always on board.

ESG has moved from being a discrete topic to being an integral part of corporate strategy that cuts across every aspect of decision-making. Indeed, a strong focus on ESG is all-pervasive in UK CEO responses. Climate change comes to the top of UK CEOs’ risks to growth. When ranking the relative importance of value drivers, 53% of UK CEOs identify ESG as ‘extremely important’, well ahead of the next placed option of ‘cost reduction’ (32%) — a remarkable response given the inflationary backdrop to the survey. ‘Strengthening ESG performance’ ranks only just behind ‘increasing operational performance’ as a driver for M&A. Its strategic importance means that 7% of CEOs walked away from a deal because they had ESG concerns. Just 1% say that their company doesn’t have a sustainability strategy.

ESG focus


of UK CEOs said that their companies were focusing M&A activity on improving their ESG performance.

The survey shows that UK CEOs are giving this topic even sharper attention than their global peers, with 98% of UK CEOs expecting ESG to be an important value driver, compared with 83% globally. This greater link to value could be due to the carrot of ‘competitive advantage’ (38%) being the main driver for UK CEOs pursuing their sustainability strategy, rather than the stick of regulatory pressures (25%). Surveys like the EY Future Consumer Index certainly support the idea that UK consumers are increasingly focused on the ESG profile of companies.

Investors don’t always share this understanding. UK CEOs say that whilst most investors and shareholders are supportive of their long-term growth initiatives, 70% have encountered resistance to their sustainability strategies, of which 42% say their shareholders want them to wait for competitors to act first — in direct contrast with CEOs’ approach to lead their markets. We’re seeing this tension develop now, with some stakeholders pushing for companies to move faster, whilst others push for a stronger focus on immediate returns. CEOs will need to address this tension and increase stakeholder engagement around ESG topics, constantly updating their narrative to ensure that they can fully articulate the benefits of their strategies and quickly respond to any concerns.

Ey Fish tank with moss and fish
(Chapter breaker)

Chapter 3

Using M&A to accelerate change

M&A remains a fundamental to how companies deliver on their strategic growth plans.

From rationalising their portfolio, to digital transformations and improving their ESG profiles, companies are using deals to reshape their business at pace. M&A activity in the UK continued apace in 2021 as companies looked to rapidly reshape their business in response to changes triggered or accelerated by the pandemic. In 2021, the UK saw 2,811 deals worth US$407.4b, just behind the exceptional pace of deal making we saw in 2020. Given the extraordinary scale of activity in 2021, many companies will be integrating recently acquired assets, but UK CEOs are still signalling that they remain strategically poised to buy assets that support growth ambitions. 

M&A intentions


of UK CEOs said that their companies actively intended to pursue M&A in the next 12 months.

About two-thirds of UK CEOs expect to transact in the UK compared with 59% globally. The UK also remains the second most attractive inbound destination for deals, only behind the US. The UK is an especially interesting inbound option for overseas buyers in areas where it has clear strengths, like financial services, FinTech and high-end consumer and industrials. UK companies can also expect a significant amount of competition from private equity in the deals market, with 45% of UK CEOs expecting strong PE competition, compared with 21% globally.

ESG and sustainability concerns are critically important for CEO dealmakers across all sectors. Alongside an increase in ‘green’ deals in renewables, we’ve also seen a strong desire to buy assets that accelerate sustainability strategies and — as we note above — a willingness to walk away from any deal that might hinder companies’ ESG strategies. The last two years have been a period of intense change that have underlined the need for companies to keep reviewing and repositioning their business and the importance of building resilience and creating the platform for long-term growth. M&A has been an integral part of this strategy and there is no sign of this changing.


The EY CEO Survey 2022 is a part of the CEO Imperative Series, which provides critical answers and actions to help CEOs reframe the future of their organisations.

About this article

By Steve Ivermee

UK&I Managing Partner Strategy and Transactions, Ernst and Young LLP

Member of the UK&I Executive working with multi-disciplinary teams to advise and support clients on the transaction life cycle. Lead UK&I Diversity & Inclusiveness Sponsor. Budding racing driver.