Amidst growth, Infrastructure and Transportation CEOs prioritizing ESG strategies to build customer relationships and meet decarbonization goals 

CEOs in the infrastructure and transportation sector anticipate business growth over the next three years, in terms of earnings and headcount, a survey of 120 sector leaders from across the world finds. But it’s in the climate risk and public trust area where sector CEOs have the most to gain and lose.

The KPMG Infrastructure and Transport CEO Outlook, now in its tenth year globally, revealed that 57 percent of sector CEOs say stakeholder expectations pertaining to ESG are changing faster than they can adapt their strategy. More than half of CEO’s believe that a global failure on climate-change adaptation will have a real short-to-medium term impact on their growth.

Furthermore, with confidence and trust in governments declining around the world, 62 percent of respondents believe the public is looking to businesses to fill the void on societal challenges. Seventy-one percent also state that they are willing to divest a profitable part of the business if it was damaging their organization’s reputation.

Gen AI is also firmly on the CEO agenda, with 68 percent of sector respondents stating it is a top investment priority, despite ongoing economic uncertainty. They also note significant challenges associated with implementing Gen AI led by worries about bias, data protection and lack of transparency.

However, the respondents believe Gen AI will be a positive influence on jobs. 94 percent of sector CEOs are planning to increase headcount over the next three years and the majority expect Gen AI to – if anything – increase their headcount. Thirty-eight percent of the total expect to increase their workforce by more than 6 percent. But competition for skills is fierce and they also report that talent challenges will likely have a negative impact on their company’s prosperity over the next three years.

Key Highlights :

• 57 percent of sector CEOs say stakeholder expectations pertaining to ESG are changing faster than they can adapt their strategy.
• 62 percent believe the public is looking to businesses to fill the void on societal challenges as confidence and trust in governments decline.
• 71 percent of CEOs are willing to divest a profitable part of the business if it was damaging their organization’s reputation.
• 63 percent of infrastructure and transportation CEOs expect earnings to grow by more than 2.5 percent over the next three years.
• 68 percent reveal that generative AI (Gen AI) is a top investment priority, despite economic uncertainty.
• 94 percent plan to increase headcount over the next three years and the majority expect Gen AI to play a large part in this.

Manish Aggarwal, Partner, Co-Head – Deal Advisory, and Head – Infrastructure, Disinvestments, and Special Situations Group, KPMG in India said –The race to embrace emerging technologies, such as Gen AI, has risen up the agenda for CEOs across the infra and transport sector. But as with many sectors, the focus on climate risk continues to be at the forefront with the decarbonizing of supply chains being marked as the top barrier to achieving net zero for sector CEOs. Coming to India, we are likely to see the implementation of one of the largest infrastructure programmes in the 21st century amongst large economies and we believe, creating fiscal sources of capital would be key to this initiative. Steps to unlock foreign and domestic capital via innovative financial structures and facilitating ease of investments would be vital. Another key point from survey is that public trust has also risen to the top of a CEO agenda, and rightfully so because, it is  imperative to achieving a license to operate and ensuring that citizens benefit and reap the value of the investments put into infrastructure.”