CEOs are currently expressing a renewed sense of optimism regarding future growth investments, despite a number of challenges, with short-term returns being high on their priority list, according to the latest findings from advisory firm EY’s quarterly CEO Outlook Pulse survey.

However, according to the survey—which canvassed opinions from 1,200 executives and 300 institutional investors globally—it appears that CEOs are keenly aware that their long-term objectives, such as decarbonisation and the creation of new revenue streams, could be accelerated by enhancing collaboration with institutional investors and governmental bodies.

“The key trend emerging from the latest edition of EY’s CEO Outlook Pulse survey is the need for CEOs to balance immediate financial pressures with longer-term imperatives,” Ronald Attard, Country Managing Partner of EY Cyprus said.

“The unfavourable economic environment is forcing CEOs to focus on managing business costs, while at the same time, the rapid growth of artificial intelligence combined with increasing cyber risks is driving them to prioritise investment in emerging technologies,” he added.

The survey revealed that 60 per cent of CEOs are highly optimistic about their companies’ revenue growth, with 65 per cent similarly upbeat about the profitability outlook.

Broadly speaking, their confidence in their companies’ prospects and the wider business environment has remained stable compared to the previous year’s survey, albeit with some indications of improvement.

An important takeaway is the heightened commitment among CEOs worldwide to address the calls from the broader community for a quicker shift towards sustainable development; more than three-quarters (77 per cent) have prioritised this.

However, more than half (54 per cent) now see sustainable development as more critical than a year ago.

Yet, in the face of economic pressures, a notable segment (23 per cent) admits that sustainable growth isn’t a current priority, attributing this stance to economic constraints (18 per cent) and other board priorities (5 per cent).

This is mirrored by a diminishing focus on environmental, social, and governance (ESG) issues among investors, with over a third (35 per cent) noting a decline in the priority given to sustainable investments compared to the previous year.

As for technological investments, nearly half (47 per cent) of the CEOs surveyed prioritise the adoption of artificial intelligence (AI) to enhance growth and productivity over the coming year.

Close behind are the imperatives of strengthening data management and cybersecurity (45 per cent), and of managing costs across all business aspects (38 per cent).

Looking at the transactional landscape, there is a positive shift in sentiment towards mergers and acquisitions (M&A) compared to the subdued activity of 2023.

Currently, an increased number of CEOs are scouting for opportunities in IPOs, divestitures, spin-offs (71 per cent), joint ventures, strategic alliances (48 per cent), or outright M&As (42 per cent), indicating a robust appetite for deals.

The primary strategic drivers for pursuing acquisitions are identified as acquiring technology, new manufacturing capabilities, or innovative startups (40 per cent), increasing market share (33 per cent), and accessing new geographies (32 per cent).

“CEOs are also looking at mergers and acquisitions primarily as a lever to address their short-term priorities rather than with a view to long-term growth,” Attard explained.

“However, as a result of this focus on short-term financial returns, sustainable growth appears to be relegated to the back burner as a priority on the business agenda, which is frustrating for those who expect businesses to set the tone on this critical issue”, he concluded.