With some 80 per cent of Canadian business leaders feeling the heat, most look to execute on ESG and boost productivity with generative AI
TORONTO , Oct. 2, 2024 /CNW/ – While confidence in their three-year outlooks remains high, Canadian business leaders are feeling the pressure to deliver on environmental, social and governance (ESG) commitments and find new ways to boost their organization’s productivity, finds KPMG International’s 2024 CEO Outlook .
The latest KPMG CEO Outlook survey finds that the CEOs of Canada’s largest and most-influential companies remain confident in their organization’s three-year growth prospects (76 per cent) and the Canadian economy (83 per cent). But 76 per cent also said they feel under more pressure to ensure the long-term prosperity of their business.
Similarly, the owners and C-suite level decision makers at Canadian small- and medium-sized businesses (SMBs) told KPMG in Canada in a survey last month that they are bullish in their organization’s three-year growth prospects (92 per cent) and the Canadian economy (88 per cent). But as many as 86 per cent say they are also feeling the pressure to ensure the long-term prosperity of their company.
“It’s not surprising that CEOs are confident after piloting through one of the most-turbulent periods in recent business history, but they acknowledge they’re now feeling the growing pressure of leading their organizations,” says Benjie Thomas , Chief Executive Officer and Senior Partner, KPMG in Canada . “Now they are aggressively looking for ways to improve their company’s productivity, optimize revenue, take advantage of new technologies like generative AI, and become cyber-proof, trade-proof and inflation-proof.”
Confidence in three-year growth prospects
Canadian
CEOs
2024
Canadian
CEOs
2023
Canadian
SMBs
2024
Canadian
SMBs
2023
Global CEOs
2024
Global CEOs
2023
Own
company
76 %
80 %
92 %
88 %
76 %
77 %
Domestic
Economy
83 %
89 %
88 %
85 %
78 %
78 %
Global
economy
69 %
69 %
84 %
81 %
72 %
73 %
The top issues identified by Canadian CEOs that could derail their three-year growth plans are: operational risks, cybersecurity and environmental / climate change. Similarly, global CEOs cited operational, supply chain, and cybersecurity risks as their top three concerns. Canadian SMBs ranked cybersecurity No. 1 followed by emerging and disruptive technologies, and energy security and affordability.
Their top-of-mind concerns figure prominently around the economy, particularly uncertainty about a soft landing.
Fifty-nine per cent of Canadian CEOs (vs. 53 per cent globally) and over a quarter (26 per cent) of Canadian SMB leaders say economic uncertainty is their biggest current challenge. Related to economic growth, nearly a third (31 per cent) of SMB leaders expressed concern over growing protectionist attitudes in some markets, including economic decoupling, compared to 19 per cent of Canadian CEOs and 14 per cent of their global counterparts.
Top Operational Priorities: ESG and People
Amid growing scrutiny from stakeholders, regulators, and lawmakers, Canadian CEOs identified executing on their ESG strategy as their top operational priority. While only half (50 per cent) of Canadian CEOs say they are prepared to withstand the potential scrutiny and expectations of stakeholders, as well as shareholders on ESG, they are in a better position than their global counterparts (34 per cent).
By contrast, SMB leaders ranked ESG No. 4 tied with inflation proofing among their operational priorities.
Instead, their top operational priority is implementing generative AI.
After taking a wait-and-see approach, they are now playing catch-up to larger Canadian organizations who made the new technology their top investment priority last year. Fifty-nine per cent of CEOs (vs. 64 per cent globally) agree that generative AI is a top investment priority, down from 75 per cent last year (vs. 70 per cent globally), likely in part reflecting the already significant investments they’ve made over the past year.
“Our survey findings show that business leaders are focusing their resources on meeting their growth forecasts and improving productivity,” says Tim Prince , Canadian Managing Partner, Clients and Markets, KPMG in Canada . “Canadian business leaders are well aware that they will need to continuously improve their operations, decarbonize their operations, and upskill their workforce to compete in a world that’s getting tougher by the day, whether it’s changing demographics, growing trade protectionism, or the impacts of climate change.”
The second most-important operational priority for Canadian and global business leaders alike is their ’employee value proposition’. The competition for a limited pool of skilled talent is a major challenge for employers, prompting them to evaluate what they can offer employees around career development opportunities, work-life balance, compensation, purpose and mission and company culture.
With the skills shortage a perennial concern, 84 per cent of SMBs expect their organization to be impacted by labour market shifts—specifically the number of employees who will retire and the lack of skilled workers available to replace them. By contrast, only about a third (28 per cent) of CEOs share similar concerns, although 79 per cent agree that organizations should be investing in skills development and lifelong learning within local communities to safeguard access to future talent.
Return to office could intensify
As part of their focus on corporate culture and talent development, CEOs are keen to get employees back into the office full time.
This year’s survey shows that 83 per cent of Canadian CEOs now expect a full return-to-office within the next three years—up sharply from 55 per cent in 2023. Further, 90 per cent say they are likely to reward employees “who make an effort to come into the office with favourable assignments, pay raises or promotions,” up from 77 per cent last year.
SMB leaders aren’t convinced, with only 20 per cent expecting a full return-to-office within the next three years. Even though they’d like people back in the workplace—85 per cent agree they’d offer rewards to entice a return—nearly two thirds (65 per cent) fully expect a hybrid workforce in three years, acknowledging that flexibility may prove essential to attracting and retaining the diverse talent they need to drive growth and productivity.
About the KPMG CEO Outlook
The 10th edition of the KPMG CEO Outlook, conducted with 1,325 CEOs between July 25 and August 29, 2024 , provides unique insight into the mindset, strategies, and planning tactics of CEOs. All respondents oversee companies with more than US$500 million in annual revenue and a third of the companies surveyed have more than US$10 billion in annual revenue. The survey by KPMG International included CEOs from 11 key markets (Australia , Canada , China , France , Germany , India , Italy , Japan , Spain , the U.K. and the U.S.) and 11 key industry sectors (asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology, and telecommunications). NOTE: Some figures may not add up to 100 per cent due to rounding.
About the KPMG Private Enterprise™ Business Survey
KPMG in Canada surveyed 735 business owners or executive level C-suite decision makers at small-and-medium-sized Canadian companies between August 13 and Sept. 4, 2024 , using Sago’s premier business research panel. Thirty-seven per cent helm companies with more than C$500 million and less than C$1 billion in annual revenue, a quarter have more than C$300 million and less than $500 million in annual revenue, 26 per cent have between C$100 million and C$300 million in annual revenue, and 13 per cent have between C$10 million and C$50 million in annual revenue.
About KPMG in Canada
KPMG LLP, a limited liability partnership, is a full-service Audit, Tax and Advisory firm owned and operated by Canadians. For over 150 years, our professionals have provided consulting, accounting, auditing, and tax services to Canadians, inspiring confidence, empowering change, and driving innovation. Guided by our core values of Integrity, Excellence, Courage, Together, For Better, KPMG employs more than 10,000 people in over 40 locations across Canada , serving private- and public-sector clients. KPMG is consistently ranked one of Canada’s top employers and one of the best places to work in the country.
The firm is established under the laws of Ontario and is a member of KPMG’s global organization of independent member firms affiliated with KPMG International, a private English company limited by guarantee. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, see kpmg.com/ca .
For media inquiries:
Caroline Van Hasselt
Media Relations
KPMG in Canada
(416) 777-3288
cvanhasselt@kpmg.ca
SOURCE KPMG LLP