CEOs in Saudi Arabia are currently optimistic, confident and expect aggressive growth through acquisitions and other inorganic methods, according to KPMG’s ‘CEO Outlook Saudi Arabia 2021’ report.
Nearly 86 percent of CEOs in the kingdom are looking at mergers and acquisitions (M&A) deals as a means of growth in the next three years, and 88 percent believe that they need to be quicker to shift investments to digital opportunities.
“With potential abound, CEOs are hoping to get on the front foot to position their businesses to capture it. Inorganic growth strategies are a popular choice to seize these opportunities,” said Abdullah Al Fozan, chairman of KPMG in Saudi Arabia.
The report also indicated that 84 percent of the CEOs have confidence in the kingdom’s growth, while 90 percent expect their company to exceed pre-pandemic levels.
“The pandemic is not over, but CEOs are increasingly confident about economic growth in Saudi Arabia and globally,” added Al Fozan.
The findings are based on a global survey among 1,325 CEOs – respondents based in the kingdom represent companies with revenues greater than $500 million and 60 percent of the companies have revenues greater than $1 billion.
The survey stated that CEOs in Saudi are increasingly integrating environmental, social and governance (ESG) practices into their business as their risk profile shifts towards disruptive technology and environmental concerns.
With that, six in ten CEOs in the kingdom found that their ESG programs improved their financial performance.
“We notice that CEOs are putting ESG at the centre of their organisation’s long-term growth strategies. It’s been encouraging to see this trend and to see business leaders successfully tie their organisation’s economic success to their ESG agendas. CEOs have proven they can be drivers of positive change,” commented Al Fozan (below).
As a result of increasing stakeholder pressure, CEOs are also placing people first to drive societal return, with 92 percent of surveyed CEOs shifting their focus to the social component of their ESG programs. On the other hand, a mere 30 percent felt that they struggle to meet diversity and inclusion expectations, compared to 56 percent globally.
In terms of climate change considerations, KPMG’s report found that 42 percent of Saudi-based CEOs intend to invest more than 10 percent of their revenues in becoming more sustainable.
“CEOs need to have a people-first mind set — investing in new technologies and human capability. They need to be purpose-led — winning the trust of stakeholders and helping build a more prosperous and sustainable world,” Al Fozan said.
With that, CEOs in Saudi are also strengthening their organisation’s digital advantage by building a more flexible future of work, with 32 percent expecting most employees to work remotely at least two days a week and 28 percent considering hiring talent to work remotely.
The report also identifies three key areas that CEOs need to focus on as they look to grow beyond the impacts of the pandemic: growth and resilience, ESG and financial value, and future of work.
“Resilience will be key to economic recovery. Along with specific interventions — from managing talent risk to building cyber defences — CEOs will need to surround themselves with resilient people. They will also need to identify the ESG investments that are necessary to drive long-term value,” he added.
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