According to new research from financial services firm EY, more than two-thirds (67 percent) of the world’s largest company CEOs say that they are likely to take public stands on politically charged issues related to global challenges.
Consumers have overwhelmingly said they support this C-level action, but the firm’s new EY CEO Imperative Study 2019explores the opinions of themost important corporate decision makers—CEOs, institutional investors and independent board members.
The survey of 200 CEOs, 100 senior institutional investors and 100 independent board members also finds that 76 percent of board directors and 79 percent of investors say they are likely to support a CEO taking a stand.
In addition, according to 57 percent of CEOs, 63 percent of board directors and 54 percent 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 percent) see more opportunity than risk in taking action on global challenges and close to half of board directors (49 percent) and investors (42 percent) support this view.
“CEOs, boards and investors recognize they have a role to play—along with the public sector—in addressing social challenges that speak to their values and in pursuing inclusive, sustainable growth,” said Carmine Di Sibio, EY global chairman and CEO, in a news release. “It’s encouraging to see signs of support within the investment community for long-term value creation.”
Institutional investors embrace rather than resist corporate action
Calls for the move to inclusive and long-term growth are also starting to impact investment decisions as 60 percent 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 percent) stating that CEO activism on global challenges have been frequently/very frequently and 35 percent 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 percent of investors say that corporate stance/actions on global challenges will become a more important factor in decision-making over the next five years.
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 percent), institutional investors (54 percent) and CEOs (51 percent) 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 percent of CEOs say they have aligned their corporate purpose
- 47 percent of CEOs have established partnerships with governments or NGOs
- 45 percent 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:
- Integration of the global challenges into corporate strategies—59 percent of boards and 50 percent of investors rank this as their top priority for CEOs
- Linking of internal governance, performance measures and rewards to global challenges—with 47 percent of boards of 43 percent of investors ranking as another top priority
The C-suite is not currently suited to the demands of the next decade
Only one-third of respondents (34 percent) 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 percent of CEOs expecting to add positions or change roles on the C-suite and 82 percent 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 percent); innovation (53 percent); artificial intelligence (43 percent); data science (33 percent); and behavioral science (25 percent).
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