Resilient energy prices, high demand bolstering CEO’s confidence: KPMG survey

Amid a turbulent landscape of regional conflicts, geopolitical frictions, trade tensions and economic uncertainty, top business leaders in the energy, natural resources and chemicals (ENRC) sector are optimistic about economic growth over the next three years.

The KPMG 2024 ENRC CEO Outlook reveals that 78 per cent of CEOs in the sector are optimistic about economic growth over the next three years, a sentiment bolstered by resilient energy prices and high demand for both renewable and fossil fuel-based energy.

“In this favourable climate, ENRC organisations are presented with a unique opportunity to refine their strategies across critical areas, including their operating footprint, cost model, emerging technologies, and Environmental, Social, and Governance (ESG) initiatives,” KPMG said.

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While the prospects are bright, they must also be mindful of the accompanying risks, particularly in two strategic domains: the adoption of generative artificial intelligence (Gen AI) and the evolving ESG landscape, it added.

Anish De, KPMG International’s Global Head of Energy, Natural Resources and Chemicals (ENRC), said “Amid a turbulent landscape of regional conflicts, geopolitical friction, trade tensions and economic uncertainty, CEOs in the ENRC sector are responding with surprising confidence and optimism.”

Geopolitical uncertainty means CEOs would need to be agile and vigilant along with supply chains that are key to the sector, being operationally resilient. Alongside all of this, generative artificial intelligence (Gen AI)—and the environmental, social and governance (ESG) agenda are emerging as both an opportunity and a risk. While the sentiment exuded may be positive, there are issues that would test CEOs. Successful organizations will be those who know exactly where they want to get to, and how they plan to get there.”

The 10th edition of the KPMG CEO Outlook was conducted with 1,325 CEOs between July 25 and August 29, 2024. All respondents have annual revenues over $500 million and a third of the companies surveyed have more than $10 billion in annual revenue.

The survey included CEOs from 11 key markets (Australia, Canada, China, France, Germany, India, Italy, Japan, Spain, the UK and the U.S.) and 11 key industry sectors (asset management, automotive, banking, consumer and retail, energy, infrastructure, insurance, life sciences, manufacturing, technology and telecommunications).

The survey highlights that 79 per cent of the CEOs anticipate that generative AI will not significantly impact the number of jobs but will instead require upskilling and redeployment of existing resources within their organisation.

Notably, 65 per cent expect to see ROI from Gen AI within three to five years—up from 48 per cent last year. This patience reflects a deepening comprehension of AI’s potential to transform business processes.

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Gen AI is a top investment priority for most ENRC CEOs (58 per cent), and two-thirds of them say they have a clear view on how it will disrupt current business models and create new opportunities.

In terms of where Gen AI will be applied within the ENRC sector, CEOs see potential across the enterprise. The IT function is the most widely cited (66 percent), but other areas including sales and marketing, research and development, finance, and strategy also feature highly.

To maximise the benefits of Gen AI, organisations should take a measured approach. Incremental implementation allows businesses to build expertise without overwhelming their existing infrastructure. Establishing sound governance structures and risk mitigation protocols will ensure clear accountability and ethical use of AI. Furthermore, adopting a “human in the loop” approach can help manage risks associated with automation and decision-making.