Investors and boards support CEO action on global challenges, EY survey finds
  • 60% of institutional investors support investment that improves long-term business prospects, even if it diminishes short-term corporate performance 
  • Cybersecurity, job loss due to technological change and income inequality are the top global challenges, CEOs report
  • CEOs say the C-suite is not suited for the challenges of the next decade – changes planned 

Prague, 1 August 2019More than two-thirds (67%) of the world’s largest company CEOs say that they are likely to take public stands on politically charged issues related to global challenges, according to the EY CEO Imperative Study 2019. The survey of 200 CEOs, 100 senior institutional investors and 100 independent board members also finds that 76% of board directors and 79% of investors say they are likely to support a CEO taking a stand. In addition, according to 57% of CEOs, 63% of board directors and 54% of investors believe it is in the best interest of large companies for CEOs to take a more active role on global challenges. The majority of CEOs (57%) see more opportunity than risk in taking action on global challenges and close to half of board directors (49%) and investors (42%) support this view. 

Institutional investors embrace rather than resist corporate action

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Calls for the move to inclusive and long-term growth are also starting to impact investment decisions as 60% of investors report supporting long-term investing to address global challenges, even when near-term performance may be diminished. 

A company’s stance and actions on global challenges is an increasingly important investment criteria, with more than half (55%) stating that CEO activism on global challenges have been frequently/very frequently and 35% of investors stating that CEO activism on global challenges have been occasionally taken into consideration for funding decisions in the last two years. Crucially, 83% of investors say that corporate stance/actions on global challenges will become a more important factor in decision-making over the next five years.

“Currently, it’s not enough that good, or even better, figures be regularly reported on a quarterly basis. Investors, and employees themselves, expect their companies and top management to take a position on broader topical issues such as climate change, the emergence of artificial intelligence and income inequality,” says Štìpán Flieger, Director of EY’s M&A Department.

C-suite not suited to the demands of the next decade

Only one-third of respondents (34%) believe the C-suite model is well-suited to the demands and opportunities of the next decade. However, CEOs and boards have been changing the face of the management model, with top positions added over the last five years including chief innovation officer, chief digital officer and chief strategy officer. 

But additions and changes to the C-suite are still being planned, with 72% of CEOs expecting to add positions or change roles on the C-suite and 82% of boards reporting the same. The top five new C-suite capabilities critical to company’s continued growth according to CEOs are: digital transformation (55%); innovation (53%); artificial intelligence (43%); data science (33%); and behavioral science (25%).

“As is true of the general population, demand for key knowledge and skills is changing at the level of corporate top management in tandem with social and technological change. So, it’s even more imperative for top management than for employees to ‘be equipped with the key skills of the future’ (Future Skills). These undoubtedly include an awareness of the possibilities and development of artificial intelligence and the use of digital technologies. However, it’s also important to combine these 'hard' skills with traditional leadership skills such as communication, teamwork, creativity or critical thinking,” says Vladislav Severa, Managing Partner of EY's Advanced Data Analysis Team.

Global CEOs see growth upside of addressing global challenges

CEOs around the world report that national and corporate cybersecurity, job losses from technological change and income inequality are the top three global challenges threatening business growth and the global economy over the next five to ten years. Additionally, board directors (58%), institutional investors (54%) and CEOs (51%) all believe to a great/very great extent that corporate action is needed to solve the top global challenges.

CEOs increasingly report that they are taking actions to address global challenges with the top actions reported being:

  • 60% of CEOs say they have aligned their corporate purpose
  • 47% of CEOs have established partnerships with governments or NGOs
  • 45% have adopted a corporate reporting framework incorporating non-traditional concepts of value, and have participated in industry or cross-industry coalitions 

However, boards and investors prioritize actions that drive internal transformation, indicating some misalignment between CEOs and these groups. The top two actions boards and investors want to see:  

1. Integration of the global challenges into corporate strategies (59% of boards and 50% of investors rank this as their top priority for CEOs)

2. Linking of internal governance, performance measures and rewards to global challenges (with 47% of boards of 43% of investors ranking as another top priority)

 

About the survey

The EY CEO Imperative Study 2019 was designed and developed by EYQ, an EY global think tank. EYQ generates new insights by bringing together business, the public sector and academia to challenge entrenched thinking, shift perceptions and help catalyze change.

 

The study findings are based on survey interviews of 200 global CEOs and 100 independent directors among the Forbes Global 2000 and Forbes Largest Private Companies, and 100 senior institutional investors globally from firms with at least US$100b in assets under management. Forbes Insight conducted the fieldwork between January and April 2019. ey.com/ceoimperative 

 

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

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 is available via ey.com/privacy. For more information about our organization, please visit www.ey.com/CZ.

 
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