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Large businesses in Saudi Arabia are expected to make investments to become more sustainable, as many chief executives have shifted their focus to environmental, social and governance (ESG) principles, according to a new study by KPMG.
Among the Saudi-based CEOs polled for the study, 42 percent said they intend to invest more than 10 percent of their revenues in becoming more sustainable.
The majority of the CEOs acknowledged that they are integrating ESG practices into their strategies, while six in ten reported that their ESG programmes have improved financial performance.
“We notice that CEOs are putting ESG at the centre of their ogranisation’s long-term growth strategies. It’s been encouraging to see this trend and to see business leaders successfully tie their organisation’s economic success to their ESG agenda,” said Abdullah Al Fozan, Chairman of KPMG in Saudi Arabia.
KPMG’s study covered a total of 1,325 CEOs worldwide, including 50 in Saudi Arabia. The respondents represent organisations with revenues greater than $500 million, with the majority (60 percent) generating revenues that exceed $1 billion.
Merger and acquisitions
The survey also found that CEOs in Saudi Arabia are optimistic and confident, and they are expected to grow their business through acquisitions. Nearly 86 percent of CEOs said they are looking at mergers and acquisitions as a means to expand their market share in the next three years.
The majority of CEOs (84 percent) also said they feel positive about the Kingdom’s growth, while 90 percent expect their company to exceed pre-pandemic levels.
“The pandemic is not over, but CEOs are increasingly confident about economic growth in Saudi Arabia and globally,” said Al Fozan.
“Inorganic growth strategies are [also] a popular choice to seize opportunities. Business leaders are looking to expand organically and continue to assess the future of work to ensure they can attract top talent.” Business conditions in Saudi Arabia’s non-oil economy continued to improve in October, with private companies reporting rising sales and trade flows, according to IHS Markit’s latest purchasing managers’ index (PMI).
The headline seasonally adjusted IHS Markit Saudi Arabia PMI stood at 57.7 in October, slightly down by 0.9 points from the previous month, but still indicative of a significant growth in sales, according to IHS.
(Writing by Cleofe Maceda; editing by Anoop Menon)
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