Irish businesses are emerging stronger from the Covid-19 pandemic than their global counterparts, according to new research by EY Ireland.
37% of Irish CEOs surveyed said their businesses have been reshaped positively in some form by the pandemic, compared with just 13% across the world.
The findings suggest that Irish firms may be adapting faster to the pandemic recovery than in other countries.
The research also reveals that Irish CEOs are feeling more confident about the future than their global counterparts, with 47% planning to invest more heavily over the next five years to sustain, improve and extend their core business, compared to just 41% of global CEOs.
The survey also found that Irish CEOs are placing slightly more emphasis on investing in existing businesses to accelerate organic growth, followed by investing in digital transformation to position them for the future.
20% of Irish CEOs surveyed said digital transformation and technological change were the top drivers of organisational change.
The survey found that more than half of Irish CEOs expect their company to pursue acquisitions in the next 12 months.
Of these, half said they will be looking for assets that either increase operational capabilities or make bolt-on acquisitions that grow market share.
Environmental, Social and Governance (ESG) criteria are also having more of an impact on M&A and investment strategies for Irish companies, with all respondents confirming sustainability factors are driving their M&A agenda in some form, particularly when it comes to reducing the risks of ESG-related regulatory costs.
Despite the record-breaking year for transactions in 2021, 97% of Irish CEOs said they either failed to complete or cancelled a planned deal in the last 12 months.
This was primarily due to the impact of the pandemic, or because of regulatory or government bottlenecks.
Additionally, while M&A may be a favoured tool for accelerating growth, 42% of Irish CEOs said they plan to reshape their businesses through organic investment.
The survey reveals that increasing geopolitical tensions, supply chain disruptions, trade conflicts, and protectionism represent the most critical risk factors to the future growth strategies of Irish companies.
94% of Irish CEOs surveyed said they were already reconfiguring their supply chains, primarily to manage geopolitical risks, while just under a quarter of respondents are increasing supplier numbers to boost resilience and reduce uncertainty.
When it comes to international trade, 73% of Irish CEOs said they were reconsidering their cross-border investments in response to increasing geopolitical tensions.
"Following two years of intense disruption to both life and business globally, current geopolitical disruption has reverberated across global markets resulting in escalating energy prices, shortages of key commodities, and massive supply chain disruptions," said Graham Reid, EY Ireland Partner and Head of Markets.
"Even though our survey was conducted at the end of 2021, the results remain valuable as they reveal a future-facing mindset among CEOs of leading Irish organisations who are looking beyond short-term pressures to invest in long-term value creation," he added.
"They are reframing their investment strategy for growth in an ever-changing business landscape."
The research suggests that environmental, social and governance (ESG) issues are among the top three considerations for Irish CEOs, with sustainability goals having a major impact on a company's investment agenda.
37% said the primary driver of their sustainability strategy is to address pressure from governments, regulators, and society.
However, 83% of Irish CEOs said they have experienced resistance to implementing some ESG measures.
Of these respondents, 40% said their investors and shareholders would prefer to wait until they see competitor strategies in their sector before moving ahead, while more than half said they had pushback from either a minority or majority of investors who are not yet convinced about the cost and potential benefits of certain elements of their ESG agenda.
While 22% of the Irish respondents said improving the environmental impact of their companies’ activities was one of the top objectives, a further 18% said they were fulfilling these goals by improving diversity and inclusion in their companies.