CEOs are adopting a dual strategy, investing in long-term growth while maintaining agility to seize emerging opportunities and respond to unforeseen challenges, such as investing in generative AI and ESG.

CEOs today face the challenge of navigating an increasingly volatile U.S. economy characterized by a blend of disruptive risks to growth and structural shifts, according to KPMG. These shifts range from persistent inflation to the transition towards cleaner energy sources and changes in the labor market. These factors collectively raise the cost of doing business while leaving minimal room for error in strategy development and execution.

The KPMG CEO Outlook for this year offers insights from over 1,300 CEOs, including 400 in the United States, shedding light on how they are tackling this era of compound volatility.

“Business leaders report they remain confident in the long-term growth prospects of the U.S. and global economies, but confidence is more subdued when it comes to the growth prospects of their companies,” says Paul Knopp, KPMG U.S. Chair and CEO.

CEOs are adopting a dual strategy, investing in long-term growth while maintaining agility to seize emerging opportunities and respond to unforeseen challenges. They are committed to investments in generative AI and Environmental, Social, and Governance (ESG) initiatives to propel business growth. Additionally, they stand ready to capitalize on transformational merger and acquisition opportunities.

Generative AI

Generative AI is recognized as a potent driver of growth, rapidly accelerating innovation across various sectors. CEOs prioritize investments in this technology, mindful of the need for ethical and effective AI use within their organizations.

“Strategic adoption in targeted areas can optimize operations, spur innovation and strengthen competitiveness. With proper planning and execution, generative AI can transform how work gets done,” says KPMG AI and Digital Innovation Vice Chair Steve Chase.

ESG

ESG strategies are also maturing, with CEOs focusing on specific decarbonization, M&A, and sustainable finance goals, expecting financial returns within three to five years. Neglecting ESG initiatives risks losing top talent and competitive advantage.

“CEOs continue to see ESG engagement—even if they don’t always use the term ‘ESG’—as the path to generating financial returns as they transition to a low-carbon economy,” says Rob Fisher, KPMG U.S. ESG Leader. “In fact, without generating financial value, no ESG program is truly sustainable.”

Both generative AI and ESG investments are seen as vehicles to enhance resilience and agility, vital attributes for CEOs leading in today’s intricate and fragmented global economy.

In this rapidly evolving business landscape, talent and culture assume greater importance. CEOs must cultivate an ethical culture that embraces change, innovation, and prudent risk-taking to drive growth. Investment in continuous upskilling and addressing burnout among the workforce is a priority. While CEOs encourage in-person work, clear communication of expectations is key to building trust.

In the face of relentless change, CEOs are taking bold, decisive actions, embracing equity, purpose, and sustainability to ensure their organizations realize their long-term growth aspirations.

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Image of Paul Knopp: KPMG