Majority of U.S. CEOs Anticipate Substantial Returns from Sustainability Investments in 3-5 Years

Recent insights from the 2024 KPMG U.S. CEO Outlook Pulse Survey reveal that a majority of U.S. CEOs are optimistic about the potential financial returns from their sustainability investments within a three to five-year timeframe. This comes despite ongoing challenges such as inflation and supply chain disruptions, alongside emerging opportunities with generative AI, showcasing the priority placed on Environmental, Social, and Governance (ESG) initiatives within corporate strategies.

The survey polled 100 CEOs from large-scale companies, each with annual revenues exceeding $500 million. Among these, a significant portion commands revenues upwards of $10 billion, providing insights into the business landscape from leaders at the helm of substantial enterprises. These leaders are navigating a complex array of challenges and opportunities to spur business growth amidst shifting economic structures.

A critical insight from the study indicates that ESG initiatives top the list of operational priorities for CEOs, with 17% of respondents highlighting this focus. Other key areas include managing inflation impacts on capital and input costs, cited by 14% of CEOs, as well as priorities tied to technological advancements and customer experience enhancements.

Rob Fisher, the ESG Leader at KPMG US, emphasized the evolved approach to sustainability, stating, “CEOs are going beyond checking the compliance box on sustainability. They’re making it a core business imperative, leveraging cutting-edge data and AI capabilities to drive real-time strategies with measurable impact.”

Expectations for ROI on ESG efforts are strong, with over half of the CEOs surveyed anticipating significant returns within three to five years. An additional 19% expect these returns sooner, within one to three years, while a further 25% foresee a longer timeline of five to seven years.

Fisher further noted the revenue-generating potential of these initiatives: “With sustainability initiatives now seen as a path to profits, not just purpose, leaders expect their investments to deliver a serious revenue boost within the next three to five years. From operations to products to governance, they are catalyzing a shift toward a more sustainable and lucrative future for business.”

The survey also highlights the primary areas of focus within sustainability efforts. Operations lead as the top concern, followed by product innovations and enhancements in governance and transparency practices.

In addition to sustainability, the survey shed light on broader CEO confidence levels, with a majority expressing optimism about both the U.S. economy and their companies’ growth prospects. An expected increase in workforce numbers further underscores this positive outlook.

On the technology front, the role of generative AI (GenAI) is under active consideration, with many leaders planning increased investments despite ethical concerns. To address these, initiatives are underway to enhance transparency and implement ethical guidelines for AI usage.

Paul Knopp, Chair and CEO of KPMG US, highlighted the strategic integration of sustainability into business operations, remarking, “CEOs are thinking beyond complying with climate disclosure rules and focused on creating long-term value for their companies, ensuring the integration of sustainability into core business practices and operations. They see their sustainability strategy and reporting being supercharged by effective data management and GenAI, which can help their organizations make real-time, data-informed adjustments.”

Click here to access the survey.