The great challenges for CEOs in 2024: Artificial Intelligence (AI), sustainability and talent retention

KPMG’s annual CEO survey shows radical changes in some perceptions such as the massive rejection of teleworking, the need to give a new approach to training workers to acquire new skills and the difficulties of transmitting environmental achievements.

While, in 2023, only 10% of Spanish CEOs surveyed placed the execution of ESG initiatives as the main strategy to achieve their organization’s growth objectives, in 2024 this percentage has doubled to reach 22%, according to the conclusions from the KPMG 2024 CEO Outlook report, prepared by the consulting firm.

Both in Spain and in all the countries analyzed (Germany, Australia, Canada, China, Spain, United States, France, India, Italy, Japan and the United Kingdom), operational risks, cybersecurity and supply chains are the most notable risks according to top executives, although with different priorities. In the Spanish case, reputational risks are also added, which reveals the impact that the greater scrutiny of interest groups on company activity is generating on corporate strategies.

Consolidated relevance

The tenth edition of the KPMG CEO Outlook offers a detailed view of CEOs’ forecasts and strategies based on a survey of 1,325 CEOs, 50 of them Spanish, between July 25 and August 29, 2024. All of them lead companies with an annual turnover of more than 500 million dollars.

This increase means that ESG issues have consolidated their relevance on corporate agendas. In fact, two out of every three Spanish CEOs (78%) claim that they have integrated ESG issues into their corporate strategies as a lever for generating value, making them a determining factor in their market positioning.

Over the past decade, CEOs’ confidence in the global economy has declined, reflecting the increasing complexity of the environment they face. While sentiment has remained relatively stable over the past three years, with 72% of CEOs optimistic about the economy, this marks a significant change from the strong 93% seen in 2015 when the survey was first launched.

The increasing complexity and variety of the demands of running a large organization are being keenly felt by CEOs, and Nearly three-quarters (72%) confess they feel under increased pressure to ensure the long-term prosperity of their business.

The value proposition for the employee, which last year was a preferred objective for 18% of those surveyed in Spain, this year the percentage is reduced to 6%. From this result, the authors of the report conclude that with regard to talent, the top executives of Spanish companies are focusing on the development of new capabilities and skills, in the face of the transformation of their organizations and, especially, in the face of the emergence of generative AI.

For two in five (40%), customer relationships and brand image are the areas where their ESG strategies will have the greatest impact. The loss of relevance in the public debate and the possibility of the competition gaining positions are considered the main risks that would be generated by not meeting the expectations of interest groups on these issues.

According to the KPMG report, regulation, increased stakeholder scrutiny and growing awareness on the part of business leaders have promoted a more rigorous and detailed activity report.

In Spain, four out of five respondents (80%) ensure that their organizations have the necessary capabilities and competencies to respond to the new reporting standards. However, the authors highlight, 60% (66% globally) recognize that their organizations are not prepared to respond effectively to greater scrutiny of their activity by their interest groups.

The application of the new sustainable information requirements by the subject companies is gradual. Thus, companies already subject to the Non-Financial Information Disclosure Directive (NFRD) must present data for the 2024 financial year in 2025. Those that were not currently subject to NFRD must present information for 2025 in 2026.

Listed SMEs, from 2026, with the possibility of applying an exception until 2028. And, finally, non-EU companies, but subject to the Sustainability Reporting Directive (CSRD) must present in 2029 information about the fiscal year 2028.

The reputation of the company has become one of the main values ​​of the entities. Thus, in the event that a profitable area of ​​the organization generated reputational damage to the company, 84% of Spanish CEOs indicate that they would not hesitate to divest from that area. However, things are not easy.

68% of Spanish top executives (69% on a global scale) have maintained their strategies related to climate change, although they have adapted the way in which they communicate them to their stakeholders. For example, Some companies prefer to talk about sustainability instead of using the term “ESG”, which has a more general meaning.

Problems with decarbonization

Both in Spain and in all the countries analyzed, the difficulty in decarbonizing the supply chain is the obstacle that most CEOs highlight (42% in the Spanish case, 30% in the global case) when asked about the barriers that exist. finding to be carbon neutral. This factor has been aggravated by geopolitical tensions, which have affected global trade routes..

Given the need to respond quickly to the challenges that arise in the short term and, at the same time as actions are solidified over time, 88% of Spanish CEOs recognize that they feel greater pressure to guarantee the prosperity of their organizations in the long term. This is a percentage 16 points higher than the global average (72%). So, Respondents expect their income to increase over the next three years and 68% estimate that this increase will be greater than 2.5%. This percentage, in Spain, is the highest among the countries analyzed.

One of the biggest concerns for CEOs is the adoption of AI. 60% of Spanish top executives affirm that they will invest in AI regardless of the economic situation (64% in all the countries analyzed). And given the public debate that some uses of AI are generating, CEOs are aware of the urgency of addressing the challenges that this technology brings with it, with a yet to be determined potential to transform all aspects of our lives.

Another important piece of information extracted from the report is that 80% of Spanish CEOs rule out that AI is going to significantly reduce the number of jobs (76% on a global scale). There is talk of transformation and they recognize that it will entail updating and improving the knowledge and capabilities of the workforce..

Supporters of teleworking decline

The report explains that since the outbreak of the pandemic, teleworking has been a fundamental element in companies’ talent attraction strategies. However, already in 2022 the majority of respondents predicted returning to the office full time. In this edition, the percentage is 94%, 16 points above that of 2023.

Only one in four respondents in Spain (28%, ten points less than in the global group of countries) believes that their employees are trained to take advantage of the potential of generative AI and 60% believe that technical capabilities constitute a burden for them. the implementation of this technology. Thus, 64% of CEOs believe that the integration of this innovation has led them to redefine their employee training and development strategies.

86% in Spain consider that their company should invest in skills development and lifelong learning to guarantee access to the necessary talent in the future.

CEOs are increasingly aware of the ethical risks linked to AI. In Spain this trend is especially noticeable: the percentage of respondents who show concern about this increases by 16 points compared to the last edition (from 62% to 78%) and is well above the global average (61%). . The slow pace of regulation and the cost of implementation add to the obstacles to making generative AI a reality in your organizations. Besides, In countries similar to Spain, an important factor is the aging of the workforce.

Although the number of Spanish CEOs who consider that this phenomenon will have a significant impact on attracting and retaining talent is low (16%), 32% express their concern that workers who are reaching retirement age will not be replaced by others who have the necessary capabilities.

In fact, 40% think that promoting the transmission of knowledge between colleagues will be necessary for this transition to be completed successfully. 98% of CEOs plan to increase their teams, eight percentage points above the last edition. Furthermore, 42% anticipate that it will do so above 6%.

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