While they remain anxious about external threats like health crises and cyber threats, concerns about climate change are low, PwC survey finds.
Now for some good news from the business world: There is significant optimism about the global economy in 2021 with 76% of CEOs saying they believe growth will improve this year, according to PwC’s annual global CEO survey.
While the global pandemic is not yet over, “CEOs’ optimism also reflects momentum in vaccine development and rollout in parts of the world,” the survey said. This carries over to their own organizations: 36% said they are very confident about their revenue growth prospects for the next year, and 47% are very confident looking ahead at the next three years.
Based on this year’s responses, PwC is estimating global growth could rise as much as 5%, in line with other analysis the firm has done suggesting the global economy will return to its pre-pandemic size by the fourth quarter of 2021 or early 2022, the report said.
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Confidence levels by industry, lingering concerns
Not surprisingly, the hospitality and leisure and transportation and logistics sectors are among those with the lowest reported confidence levels. In contrast, tech CEOs said they are more confident than their peers in every other industry, which reflects digital acceleration during the pandemic, the report said.
“Taking a closer look at the effects on companies in different industries, we see how many will be reinventing their workplaces as the vaccine rollout continues—with flexible work models becoming a permanent fixture for a range of roles, including sales, finance and technology,” the PwC report said. “But striking the right balance will be more challenging in industries such as hospitality, transportation and retail, where business model changes are likely to require significant shifts in deeply ingrained customer behaviors and employee ways of working.”
That said, there is some anxiety over threats in the external environment, with pandemics and other health crises cited by 52% of CEOs as their No. 1 concern. Six years ago, the last time the PwC survey asked this question, only 9% of respondents selected this threat, the report noted.
In terms of other threats, cyber threats was second on the list (47%) followed by over-regulation (42%).
Lack of momentum on climate change
Far more surprising than the rise of pandemics on CEOs’ threat lists “was the modest rise of climate change as a priority,” the report said. This year, 30% of CEOs cited climate change as an extreme concern compared to 24% in 2020. “This may seem like a notable jump, but in the context of rising anxiety about nearly all threats, it represents just a marginal increase,” the report said.
Further, another 27% of CEO respondents reported being “not concerned at all” or “not very concerned” about climate change, according to the report. And 60% have not yet factored climate change into their strategic risk management strategies, PwC said.
“In fact, at a country level, our results show a moderately negative correlation between exposure to natural hazards and companies’ preparedness for climate-related risk. Companies in the countries with the most exposure—which are generally among the largest contributors to CO2 emissions—are less likely to have embedded climate change into their overall risk management approach,” the report said.
Anxiety about cyberattacks, misinformation
What CEOs are expressing major anxiety over is the specter of cyberattacks. It is now the No. 2 concern, cited by 47% of CEOs, compared to 33% in 2020. It was the top threat for CEO respondents in North America and Western Europe, the report said.
Cyber threats are the top concern for CEOs in the asset/wealth management, insurance, private equity, banking and capital markets and tech sectors, according to the report.
Also rising rapidly on the list of CEOs’ concerns is the spread of misinformation (28% are “extremely concerned,” up from 16% in last year’s study), which has profoundly impacted recent elections, reputations and public health, the report noted.
“At its core, misinformation reflects today’s historically low levels of trust,” the PwC report said. “For business leaders who need to build back this trust, being transparent about the efficacy of products and sharing data can help.”
While these dynamics exist, they are not stopping many companies from accelerating their digital transformations during the pandemic. When asked how they plan to change their long-term investments over the next three years as a result of the COVID-19 crisis, 49% of CEO respondents said they plan to significantly increase digital transformation followed by 34% who said they will moderately increase their digital initiatives.