19.04.2024

ESG remains a top operational priority for US companies

The majority of U.S. CEOs expect to see significant returns on their companies' sustainability investments within three to five years. Also, corporate leaders continue to rank ESG as their top operational priority, even as they face the challenges of inflation, supply chain and AI-related opportunities.

That's according to a new study published by professional services firm KPMG and cited by esgtoday.com.

For the purpose of the analysis, KPMG surveyed 100 CEOs from large companies with annual revenue of more than $500 million (a third of them with more than $10 billion in revenue) about the key challenges and opportunities for driving business growth and managing the mix of near-term risks and structural economic changes.

Sustainability is becoming a core business imperative

Examining a range of factors from generative AI to talent management, the study revealed that implementing ESG initiatives remains a top operational priority for CEOs, cited by 17% of respondents. Inflation-resistant capital and input costs followed at 14%. With 11% each, there are three other priorities – advancing digitization and connectivity, improving the flexibility and sustainability of the supply chain, and improving the customer experience.

CEOs are making sustainability a core business imperative, using cutting-edge data and AI capabilities to drive real-time strategies with measurable impact,” said KPMG US ESG Head Rob Fisher.

The survey showed that CEOs continue to focus on ESG as initiatives and investments are expected to deliver financial returns. According to the survey, 55% of CEOs report that they expect to see a “significant return” on their sustainability investments in 3-5 years, with 19% expecting a significant return in 1-3 years. Another 25% expect a longer period, predicting 5-7 years.

With sustainability initiatives now seen as a path to profits rather than just a goal, leaders expect their investments to provide a major boost to revenue over the next three to five years. From operations to products to governance, they are catalyzing the move to a more sustainable and profitable future for business,” adds Fisher.

The survey also assessed CEOs' key priority areas for their sustainability efforts, with Operations emerging as the area of ​​greatest focus cited by 42% of respondents, followed by Products at 24%, and models of governance and transparency protocols, such as best practice reporting, with 16%.

Other key findings in the survey include a high level of CEO confidence, with 87% reporting confidence in the growth prospects of the US economy and 78% in the growth prospects of their own companies, and 72% expecting their companies to increase of the number of employees in the following year.

The analysis also explored CEOs' views on the opportunities and challenges of generative artificial intelligence, with 41% planning to increase investment in GenAI over the next year, while 38% cited ethical issues as a key challenge to its implementation.

CEOs think beyond compliance and focus on creating long-term value for their companies by ensuring sustainability is integrated into core business practices and operations. They see their sustainability strategy and reporting strengthened by effective data management and GenAI that can help their organizations make real-time, data-informed adjustments,” said KPMG US CEO Paul Knopp.