Resilient CEOs prioritize investments in artificial intelligence (AI); decarbonization takes a back seat

• CEOs optimistic about revenue growth (Singapore 55%, global 60%) and profitability (Singapore, 48%, global 60%)
• Investments in technology, data and cybersecurity dominate CEOs’ agenda for the next 12 months
• Sustainability considerations less of a priority for Singapore CEOs 

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. However, in a challenging market, there remains a focus on short-term returns. Respondents globally 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 the government.

This is according to the latest quarterly EY CEO Outlook Pulse survey of 1,200 global executives, including 40 in Singapore, and 300 institutional investors globally that provides insights on boardroom agenda priorities within a rapidly evolving global economic landscape.

Fifty-five percent of the Singapore CEOs (global 60%) surveyed say they are more optimistic about their companies’ revenue growth, with 48% (global 65%) feeling more positive about their business’s profitability. This is on the back of more optimism about global economic growth (Singapore 43%, global 33%).

Vikram Chakravarty, EY Asean Strategy and Transactions Leader, says:
“CEOs in Singapore appear to be less optimistic about their companies’ growth and profitability than their global counterparts. This is despite the major trends and geopolitical disruptions that potentially allow Singapore and Southeast Asian markets to benefit from labor and trade flows, highlighting their relatively more cautious approach and perspectives. It is understandable that business leaders are more thoughtful about their growth strategies during economic uncertainties, but they should also consider bold measures as needed to move ahead of the competition.”

Technology and AI top strategic priorities

Technology appears to be seen by the survey respondents as a key approach to help their companies address challenges – from enhancing business performance to sustainability. The survey found that investing in technology, including AI, to improve growth and productivity, is a top priority for 33% of Singapore respondents (global 47%) over the next 12 months. Other top priorities are enhancing data management and cybersecurity (Singapore 33%, global 45%) and investing in employees’ training and reskilling (Singapore 23%, global 15%).

Chakravarty says: “AI and generative AI (GenAI) are among the most important emerging technologies to impact productivity and creativity. However, it will take time for companies to experiment and fully leverage the opportunities from AI and GenAI. Hence, CEOs need to consider all aspects of AI, digital as well as cybersecurity to fully exploit the potential of technology on their company’s business performance and growth.”

CEOs more positive about mergers and acquisitions

CEOs and institutional investors have a positive outlook on mergers and acquisitions (M&A), even against a subdued deal landscape in 2023. 100% of the surveyed CEOs in Singapore (global 99%) are looking to pursue transaction opportunities over the next 12 months. These transactions include IPOs, divestments or spin-offs (Singapore 63%, global 71%), joint ventures and strategic alliances with third parties (Singapore 50%, global 48%) and M&A (Singapore 45%, global 42%), signaling a robust appetite for deals.

When asked what the top strategic drivers were for pursuing acquisitions, the survey found that reacting to changing customer behavior (Singapore 50%, global 30%), growing market share (Singapore 39%, global 33%) and accessing new geographies (Singapore 33%, global 32%) stood out as the top three drivers. For global respondents, acquiring technology, new production capabilities or innovative startups (Singapore 22%, global 40%) was also a key consideration.

When asked about the ability to structure a deal competently in today’s complex M&A environment, the top three areas that the surveyed CEOs thought they had limited or no capabilities were anticipating potential regulatory challenges ahead of the deal (Singapore 36%, global 20%), having a comprehensive narrative to engage all stakeholders (Singapore 28%, global 19%) and managing the tax implications of the deal (Singapore 28%, global 21%).

Chakravarty says: “With the easing of inflation and interest rates, the time is ripe for M&A activities. With global funding markets more open in 2024 than 2023, acquirors should be more confident in securing funding. In addition, companies looking to divest will be supported by increasing appetite from large Singapore companies and conglomerates, as well as private equity players based in Singapore.”

Sustainability is less of a priority for Singapore CEOs compared with 12 months ago

Faced with a challenging economic environment, more than half (58%) of Singapore CEOs surveyed (global 23%) have deprioritized their focus on sustainability from 12 months ago. Among them, 43% (global 18%) indicated that it was due to challenging economic or financial circumstances, while 15% stated that it was due to a focus on other boardroom priorities. For those that indicated that sustainability continues to be a priority compared with 12 months ago, 23% (global 54%) shared that it is a higher boardroom priority today.

The surveyed respondents believe that technology and AI hold the answers to the key sustainability challenges faced (Singapore 73%, global 75%). They also share their fears of being accused of greenwashing, which leads to “greenhushing” among companies (Singapore 71%, global 73%); and that shareholders are more focused on companies’ earnings targets than long-term sustainability performance (Singapore 70%, global 73%).

Globally, investors are pulling back from environmental, social and governance (ESG) issues, with more than a third of institutional investors (35%) around the world saying that sustainability is a lower priority for their investment portfolios than it was 12 months ago.

Chakravarty says: “Sustainability has obviously slipped as a business priority among CEOs. However, with governments continuing to focus on sustainability through regulations such as requirements for Singapore businesses to make climate-related disclosures in their sustainability reports, business leaders should not lose sight of their decarbonization and sustainability strategies. 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.”

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

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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%).