Press release
01 May 2024  | London, GB

Resilient CEOs prioritize AI investments now and decarbonization next

Press contact

  • Two in three CEOs optimistic about revenue and profit growth despite a challenging economic environment
  • Investments in tech, data and cybersecurity dominate CEOs’ agenda for the next 12 months
  • Sustainability considerations becoming deep-rooted in long-term corporate decision-making

CEOs are feeling more hopeful about their immediate prospects and the actions they need to take now to create capital for investment in future growth. But in a challenging market, there remains a focus on short-term returns. Respondents indicated that longer-term ambitions around decarbonization and the creation of new revenue streams could be attained faster by engaging more effectively with institutional investors and government.

This is according to the latest quarterly EY CEO Outlook Pulse survey of 1,200 global executives and 300 institutional investors that provides insights on boardroom agenda priorities within a rapidly evolving global economic landscape.

Sixty percent of the CEOs surveyed say they are more optimistic about their companies’ revenue growth, with 65% feeling more positive about their business’s profitability. CEO respondents’ views of the outlook for their company and the wider business environment remain relatively unchanged compared with 12 months ago, with some signs of upside potential.

CEOs and investors diverge on sustainability focus over next 12 months

Delivering on broader societal demand to accelerate their sustainability journey is a priority for more than three-quarters (77%) surveyed, and more than half of CEOs globally (54%) see sustainability issues as a higher priority than 12 months ago. However, with a challenging economic environment, nearly one in four (23%) responded that they have deprioritized sustainability with 18% stating that this was due to financial circumstances and a further 5% looking to focus on other boardroom priorities. Investors are pulling back from environmental, social and governance (ESG) issues, with more than a third of institutional investors (35%) saying that sustainability is a lower priority for their investment portfolios than it was 12 months ago.

Andrea Guerzoni, EY Global Vice Chair – Strategy and Transactions, says:

“A misalignment in priorities between short-term financial returns at the expense of achieving sustainability targets more swiftly may be shortsighted. Although it’s reassuring to see that CEOs remain positive about their business outlook with many remaining committed to accelerating or delivering on their decarbonization targets, the fact that nearly one in four CEOs are moving sustainability down their business agenda is disappointing for those who look to companies to set the tone of this topic.

“Achieving sustainability targets can be challenging, particularly in a difficult, cost-focused market, but the thrust toward a sustainable future is not just a financial and business imperative but a shared commitment across the corporate world.”

Technology and AI top strategic priorities

Investing in technology, including artificial intelligence (AI) to improve growth and productivity, is a top priority for nearly half (47%) of CEOs over the next 12 months. Enhancing data management and cybersecurity (45%) and managing end-to-end costs in every aspect of their business (38%) also remain as important strategic priorities for companies.

Guerzoni says: “Increased investment in emerging technologies is hardly surprising given the rapid growth of AI among many industries, combined with heightened cyber risk concerns and an uncertain economic landscape. CEOs are balancing taking defensive action on short-term pressures with longer-term imperatives. By far the most compelling immediate actions are around technology to improve growth and productivity, as well as boosting data management and cybersecurity to protect themselves from cyber threats. There remains a keen focus on managing end-to-end business costs, which has become a critical focus of investors, even as economic conditions, including inflation and input costs have tempered.”

CEOs more positive about mergers and acquisitions

CEOs and institutional investors have a positive outlook for mergers and acquisitions (M&A), albeit compared to a subdued deal landscape in 2023. More CEOs are looking to pursue transaction opportunities over the next 12 months, from IPOs, divestments or spin-offs (71%) and joint ventures and strategic alliances with third parties (48%) to M&A (42%), signalling a robust appetite to pursue deals.

When asked what the top strategic drivers were for pursuing acquisitions, the survey found that acquiring technology, new production capabilities or innovative startups (40%), growing market share (33%) and accessing new geographies (32%) stood out as the top three drivers.

Guerzoni, says: “CEOs are looking at M&A as a key lever to address their near-term priorities. CEOs do need to look beyond the short-term efficiency and mid-term productivity gains that AI promises. One priority three years out is revenue growth. But the potential for emerging technologies and AI to accelerate growth through new products and services or accessing adjacent or new markets needs to be activated now.

“With global funding markets currently more open in 2024 than 2023, acquirors should be more confident in securing funding. But markets could quickly tighten again, as significant voting in this global election super cycle come closer. Companies looking to divest will also be supported by increasing appetite for new issues on exchanges and the long-awaited return of private equity (PE) as a competitive buyer. However, the exact time of the return of PE as a major player in M&A is still to be determined. There may have to be a settling of monetary policy path before a more robust and sustained return.”

To read the full report, please visit: ey.com/CEOOutlook

-ends-

About EY

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 organization, 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.

This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.

About the April 2024 EY CEO Outlook Pulse

On behalf of the global EY organization, in March and April 2024, FT Longitude, the specialist research and content marketing division of the Financial Times Group, conducted two comparative surveys:

An anonymous online survey of 1,200 CEOs from large companies around the world that aims to provide valuable insights on the main trends and developments impacting the world’s leading companies as well as business leaders’ expectations for future growth and long-term value creation. Respondents represented 21 countries (Brazil, Canada, Mexico, the United States, Belgium, Luxembourg, the Netherlands, France, Germany, Italy, Denmark, Finland, Norway, Sweden, the United Kingdom, Australia, China, India, Japan, Singapore and South Korea) and five industries (consumer and health; financial services; industrials and energy; infrastructure; technology, media and telecoms). Surveyed companies’ annual global revenues were as follows: less than US$500m (20%), US$500m–US$999.9m (20%), US$1b–US$4.9b (30%) and greater than US$5b (30%).

An anonymous online survey of 300 institutional investors, indicating that respondent group’s unique insights into current macroeconomic environment and the role of sustainability factors in investment decision-making. Respondents represented 21 countries (Brazil, Canada, Mexico, the United States, Belgium, Luxembourg, the Netherlands, France, Germany, Italy, Denmark, Finland, Norway, Sweden, the United Kingdom, Australia, China, India, Japan, Singapore and South Korea). Surveyed institutions’ assets under management (AUM) were as follows: less than US$1b (20%), US$1b–US$9.99b (40%), US$10b–US$49.99b (20%) and US$50b or more (20%).

Related news

EY launches OpsChain Contract Manager solution to support secure private business agreements on public Ethereum

LONDON, April 17, 2024 – The EY organization today announces the launch of EY OpsChain Contract Manager (OCM), a transformative blockchain-enabled solution for contract management. EY OCM helps enterprises to execute complex business agreements, supporting confidentiality, helping improve time efficiency, and achieving cost reduction, with automatic adherence to the agreed terms.

EY and Saïd Business School study reveals that leaders prioritizing a human-centered approach to transformation turning points are up to 12x more successful

LONDON,16 April 2024. The EY organization’s latest research with Saïd Business School, at the University of Oxford, reveals new insights into what happens when a transformation program’s leadership believes a transformation has or will go off-course and intervenes with the intent of improving its performance (turning points).

Extreme E and EY publish Season 3 report, recording 8.2% carbon footprint reduction as female-male performance gap continues to narrow

LONDON, 9 APRIL 2024. Extreme E has published its third Sustainability Report, compiled, and produced in collaboration with EY. Continuing to race the series’ ODYSSEY 21 off-road electric vehicles and leveraging solar and green hydrogen energy, the report reveals that the racing series maintained its carbon-neutral status and reduced its overall carbon footprint by 8.2%.

Major shift in global IPO market share from the past five years

London, 28 March 2024. The year kicked off on a cautiously optimistic note, marked by a selective thaw following a quieter period. The Americas and EMEIA IPO markets had a bright start in 2024, increasing global proceeds. However, the Asia-Pacific region started on a weak note, weighing down the overall global volume.

EY announces 18 women entrepreneurs selected for the EY Entrepreneurial Winning Women™ Asia-Pacific class of 2024 

HONG KONG, 27 MARCH 2024 — The EY organization today announces the details of 18 female entrepreneurs selected for the EY Entrepreneurial Winning Women™ Asia-Pacific class of 2024 ⁠— a bespoke executive program that identifies and champions a select group of high-potential entrepreneurs who have built profitable companies and provides them with connections and resources needed to unlock their potential and sustainably scale their companies.

EY announces acceleration of client AI Business Model adoption with NVIDIA AI

LONDON, 20 March 2024. The EY organization today announces Ernst & Young LLP (EY US) will help clients implement and accelerate their artificial intelligence (AI) journeys using NVIDIA’s industry-leading technology and solutions.