Despite the growing interest in environmental, social, and governance (ESG) issue, strategy is still primarily driven by business metrics, both globally and in India. Most CEOs have goals related to non-financial outcomes such as customer satisfaction, employee engagement, and automation or digitisation included in their long-term strategy. Less well-represented, in strategies and compensation, are targets related to workforce gender representation and climate mitigation and adaptation.
As per PwC’s Annual Global CEO Survey, 81% and 75% of India CEOs, as against 71% and 62% of global CEOs, include customer satisfaction and employee engagement metrics respectively in their company’s long-term corporate strategy and 78% of India CEOs, as against 54% of global CEOs, include automation and digitisation goals in their company’s long-term corporate strategy.
“17% and 14% of India CEOs, as against 11% and 13% of global CEOs, factor in gender representation and greenhouse gas emissions respectively in their company’s annual bonus or long-term incentive plans,” the survey adds.
The diverse paths to net zero
The survey noted that of the India companies that participated in the survey, 27% already have a net-zero commitment (22% globally) in place, 40% are in the process of developing and articulating their commitments (29% globally), and only 30% have neither made nor are in the process of making any net-zero commitment (globally 44%).
At the sector level, energy, utilities and resources are the most represented ones among those that have made net-zero commitments. This reinforces the fact that high-emitting (and hard-to-abate) industries are often front and centre when it comes to climate action, placing them in the complex but critical role of problem-contributor and problem-solver.
Optimism On Stronger Economy
The survey, which polled 4,446 CEOs in 89 countries and territories between October and November, 2021 and includes insights from 77 CEOs from India, also highlighted that CEOs in India are significantly optimistic about the prospects for a stronger economy in the coming year despite a variety of headwinds, most notably related to the ongoing Covid pandemic.
As per the survey, 99% of CEOs in India believe the country’s economic growth will improve over the next 12 months, with 94% of them being optimistic about global economic growth improving over the next 12 months, as against 77% of global CEOs.
While for the most part, CEOs globally are at least as optimistic as they were last year about the prospects for economic growth in 2022, the optimism of India CEOs – up from 88% last year – stands out at 94%.
When it comes to the revenue prospects of their own companies, 98% of CEOs are confident about growth in the same time period/next 12 months.
“While Omicron has cast a shadow and CEOs are focused on the health and safety of their employees at the moment, CEO confidence and optimism over the past one year is testimony to the resilience of Indian companies. The vigour with which most Indian business leaders took the challenges brought in by the pandemic head on, coupled with the will to emerge stronger in the face of adversity, has led to sustained growth for businesses in India. Perhaps owing to the futuristic groundwork done during the difficult times, 97% of India CEOs are confident about their own company’s prospects for revenue growth not only in the near term but also over the next three years,” said Sanjeev Krishan, Chairman, PwC India.
While there is optimism, concerns about some clear threats for India’s CEOs continue to remain. Last year, 70% of India CEOs viewed the pandemic as a top threat to growth, while 62% considered cyber threats as an impediment to growth.
This year, 15% of CEOs in India are apprehensive about cyber risks hindering their company’s ability to raise capital. India CEOs also agree that cyber risks could cause severe revenue disruptions, with 64% of respondents fearing a breach could hinder sales of products or services. Besides business disruptions, 47% of chief executives believe cyber threats could impede their ability to develop products and services, says the report.
Around 89% of India CEOs are concerned about health risks – 9% higher than their global counterparts. This is perhaps an indication that business leaders would like to exercise caution when it comes to making early investment and business decisions, despite vaccination drives worldwide. Concern over the ability to attract and retain talent (61%) is also strongly linked in CEOs’ minds with health risks.
Adding to the continued challenge of the mutating COVID-19 virus is the rising geopolitical conflict which has led to global disruptions in commerce.
“After a challenging year, business leaders are under pressure to deliver top-line results. It will require them to take proactive steps to mitigate current and future risks – be they around technology, cyber security, talent or health. Focusing on long-term challenges and issues around climate change and social inequality also becomes extremely crucial given the highly uncertain, volatile environment we are in and will define what sort of world we live in and hand down to the next generation,” said Krishan.