Among the main risks to the future development of the business, 87% of the world’s executives now most often cite rising prices and production costs, according to the latest EY 2022 CEO Outlook Survey by the audit firm EY (Ernst & Young). in the world.
At the same time, the survey concludes that managers are ready to invest more this year to strengthen their market position for future growth – 54% prioritize investment in existing business development, digital transformation and sustainability, while 59% plan to acquire acquisitions and mergers in the coming year. (M&A) transactions, compared to 48% a year earlier.
Guntars Krols, EY’s partner in the Baltics, explains that confidence in growth has returned to business leaders despite the protracted crisis, but rising prices and production costs are a cause for concern and caution.
“It should also be borne in mind that this year is important for implementing, or at least embarking on, a transformation of corporate sustainability: global competition has begun for strategies to improve the environment, social issues and governance, and those who are slow to do so are at risk of irreversible loss. market position, “says Crawley.
In addition to rising costs in terms of other development risks, trade tensions are cited as a critical growth risk by 18% of business leaders, while the effects of climate change are cited as a critical risk by 17% and another 13% are concerned about growing competition from new entrants.
Over the next year, business leaders will prioritize acquisitions that will strengthen their operating capacity and capacity, with 26% of executives prioritizing transactions that will improve the company’s position in ESG or environmental, social and business areas. issues and governance.
Krols emphasizes that Latvian entrepreneurs should also take into account that an overwhelming majority or 99% of business leaders in the world indicate that environmental, social and governance issues are important in making acquisition decisions, and 6% admit that they have given up transactions in the last year. with concerns about the environmental, social and governance performance and position of the acquiree.
Kroll points out that it will soon be difficult to conduct M&A transactions with companies that will have unsatisfactory sustainability performance, or this will negatively affect the assessment of transactions.
The study shows that the attitude of business leaders in favor of sustainable development has strengthened and, although revenue growth remains a top priority, 82% of respondents note that environmental, social and governance factors are very important or important for strategic decisions. Another 28% of managers say that leadership in sustainability issues gives them a competitive advantage.
At the same time, 65% of business leaders admit that they have faced investor and shareholder resistance to the company’s chosen strategy for moving to sustainability. At the same time, 21% of respondents mention that investors do not show support for long-term investment plans and place special emphasis on short-term revenue – on a quarterly basis.
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