Concerns and Challenges for Singapore CEOs

Photo by Pavel Danilyuk

The KPMG 2022 CEO Outlook, which asked more than 1,300 CEOs at the world’s largest businesses about their strategies and outlook, has uncovered the top concerns and challenges for Singapore CEOs.

Reputational risks and economic pressures are top concerns for Singapore CEOs

In terms of top concerns faced by business leaders, CEOs globally were primarily fatigued by continued uncertainties posed by the pandemic (15 percent), aside from the potential of rising interest rates, inflation and anticipations of a recession (14 percent).

Even as they take steps to insulate their businesses from the upcoming recession, CEOs in Singapore are more aware of the broader public scrutiny on their corporate purpose and environmental, social and governance (ESG) accountability, reflected by their choice of reputational risk (20 percent) as the top concern.

However, economic pressures remain a real concern with over half of CEOs in Singapore (52 percent) mulling over whether to pause ESG efforts in the next six months. The table below lists the top three pressing concerns for CEOs globally and locally.

CEOs face increasing stakeholder scrutiny on social issues, with economic pressure set to slow ESG ambitions

Amid continued demand for increased reporting and transparency on ESG issues, CEOs globally (38 percent) and in Singapore (32 percent) say that their top challenge in communicating their ESG performance lies in articulating a compelling ESG story to stakeholders – similar to last year. In Singapore, CEOs are seeing the biggest stakeholder demand from regulators (33 percent), with pressure from employees and new hires on the rise this year at 28 percent as compared with zero percent last year.

Some of the barriers Singapore CEOs face in delivering on their ESG strategy include identifying and measuring agreed metrics (28 percent) and a lack of budget to invest in ESG transformation (20 percent). Also key to achieving their net zero and climate ambitions will be in attracting the right talent and skills. Nearly a quarter (22 percent) of global CEOs say a lack of skills and expertise is hindering the implementation of solutions — similar to the 28 percent seen in Singapore and an increase from 16 percent earlier this year.

Global CEOs are also recognising the need to pay closer attention to the ‘S’ in ESG going forward, with nearly three-quarters of respondents (72 percent) believing that stakeholder scrutiny on social issues will continue to accelerate.

Forty percent of Singapore CEOs say that taking a more proactive to societal issues will be the main driver towards accelerating their company’s ESG strategy over the next three years. This is also the top driver for CEOs in the region (37 percent) and globally (34 percent). In fact, four in five Singapore executives (80 percent) have indicated that they have a responsibility as business leaders in driving greater social mobility.

CEOs also find that ESG initiatives are also starting to pay off financially, with a majority of those in Singapore (56 percent) reporting that these programmes have made a positive impact on their financial performance, up from the 40 percent last year.

In addition, 44 percent of Singapore CEOs believe that failing to meet stakeholders’ ESG expectations could make raising finance much more costly and difficult.

To meet stakeholder expectations, 88 percent of CEOs here expect to rely more on external assurance of their ESG data, far higher than the 52 percent globally and the 55 percent regionally.

However, as economic uncertainty continues, more than half of COEs here (52 percent) are pausing or reconsidering their existing or planned ESG efforts in the next six months, while 28 percent have already done so. Increased worldwide geopolitics have also affected the ESG plans of 60 percent of Singapore CEOs.

Cyber security no longer corporations’ biggest threat, with companies prepared for attacks

Cyber security has dropped from the top five risks to growth over the past year, with only 6 percent of CEOs globally naming it as their top risk. With rising economic concerns, interest rate and regulatory risks have emerged as among the key threats to growth for CEOs in Singapore (16 percent each), cyber security risk has similarly fallen to 4 percent, placing it among the lowest.

However, the cyber environment continues to evolve with 77 percent of CEOs globally and 60 percent of CEOS in Singapore saying that their organisation views information security as a strategic function and as a potential source of competitive advantage.

Nearly three-quarters of organisations (72 percent) in Singapore are also confident in their preparedness against a cyber-attack, higher than the 69 percent in Asia Pacific and 56 percent globally.

Bill Thomas, Global Chairman & CEO, KPMG, said: “Once-in-a-generation issues — a global pandemic, geopolitical tensions, inflationary pressures and financial difficulties — have come in short succession and taken a toll on the optimism of global CEOs.

“While it’s unsurprising the economic climate is now a top concern for business leaders, it’s reassuring to see high levels of confidence among executives in their own companies and their longer-term prospects for growth.

“The events of recent years have created real turbulence for the business community. Our findings should provide some cautious optimism that, in contending with and overcoming these ordeals, executives are more confident in their companies’ resilience and are focused on mitigating some of the very real uncertainties we face today.”