The Mazars 2021 C-suite barometer indicates that businesses across the world are confident they can respond to the trends ahead. Among the key findings are that 94 per cent are certain they can respond to trends in technology and innovation; 91 per cent are confident in responding to expectations for governance, ethics and social responsibility; and 90 per cent are confident in responding to new or higher regulatory requirements.
The 2021 C-suite barometer: Time for action report is the result of an in-depth survey of over 1,000 executives from 39 countries around the world, asking their views on a range of issues including sustainability, technology and regulatory changes to cyber security and leadership. While the research was conducted in late 2021, the insights uncovered a sense of confidence and resilience: with the ongoing impact of the pandemic, rising inflation and the horrifying attack on Ukraine, these are qualities that are likely to be tested once again this year.
Focus on ESG
The focus on sustainability strategy should not come as a surprise, according to Mazars managing partner Tom O’Brien. “Businesses that prioritise sustainability create economic value and contribute to healthy environments and strong communities,” he says. “They also tend to have in-built resilience that sees them through turbulent periods. With consumers and governments placing increased emphasis on businesses to transform, companies can no longer afford to delay their plans in this area.”
And businesses must approach sustainability in its broadest sense. “It is likely to affect all aspects of business in the coming years, from complying with legal obligations and controlling costs to attracting and retaining clients, staff, and capital,” he points out. “Issues such as climate change, economic development, corporate governance, and social responsibility are all part of the conversation, creating complexities and opportunities. Businesses that embrace and adapt to these societal shifts will be the most likely to succeed as we move towards a decarbonised and more sustainable future.”
That success will be driven by some clear benefits, he adds. “Not only will it help develop your business vision and strategy, but a sustainability approach will also help reduce unnecessary costs through the implementation of leaner and smarter processes.”
Businesses that prioritise sustainability create economic value and contribute to healthy environments and strong communities
For many companies, the biggest challenge will be the task of incorporating environmental, social and governance (ESG) principles into their long-term strategy and the first step is to identify the most important aspects of ESG for the business. “ESG is very broad, so the first step we complete with organisations is a materiality assessment to identify those areas where an organisation can have the greatest impact. Once these material issues are identified we embed a focus on them into the business strategy and operations. Mazars offers a fresh perspective on integrating ESG issues into a company’s objectives. As a company that places sustainability at the heart of what we do, we appreciate the importance of fully understanding a business’s impact on the environment and society. We can advise and guide organisations on how to build a sustainable business that empowers people, promotes collective responsibility, and minimises the environmental effect.”
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SME outlook
While the great majority of businesses are confident in their ability to meet the wide range of challenges facing them in the coming year, O’Brien foresees some turbulent times ahead for Irish SMEs, including the continuing fallout from Brexit, supply chain and inflationary pressures and uncertainty from the current conflict in Ukraine.
“One would expect that interest rates will increase over the next 12 months adding further pressure to businesses and households,” O’Brien notes.
As we emerge from the pandemic, there will be a lot of opportunities for business growth
“The situation for Irish SMEs and business owners varies by sector. For example, the pandemic affected the hospitality and tourism industries, although the significant government support directed at such businesses helped to reduce the extent of the impact. Recruiting staff is now a major challenge for these businesses, with many of their employees having left the sector over the past 18 months. In contrast, other businesses used the pandemic as an opportunity to innovate, expand internationally or implement new business models that have brought efficiencies and a competitive edge to their companies.”
Cash flow will become an issue for some as the supports unwind. “Many SMEs used the Revenue Warehousing Scheme as the lender of last resort, and it is likely some of this debt will never be repaid. It will be interesting to see if many SMEs avail of the new SCARP restructuring tool and what the attitude of Revenue will be to the debt compromise that will inevitably ensue in such cases. However, as we emerge from the pandemic, there will be a lot of opportunities for business growth.”
Regulatory change
Irish businesses will also have to face ongoing regulatory change in the coming years, including the crucially important issue of the gender pay gap. “This will affect all sectors,” O’Brien notes. “The Gender Pay Gap Information Act 2021 has introduced the legislative basis for gender pay gap reporting in Ireland. This welcome piece of legislation will require organisations with over 250 employees to report on their gender pay gap in 2022. At Mazars, we look forward not only to assisting our clients in meeting the new requirements but helping improve their gender pay gap.”
Outsourcing is coming in for increased attention. “Whilst outsourcing offers our clients and the industry great opportunities in terms of allowing them to scale and grow their businesses efficiently and quickly, it does create significant risks that need to be managed, especially for overseeing the activities of these outsourcers in relation to customer data,” O’Brien explains. “This continues to be an area of great focus on the part of the Central Bank as evidenced by the publication of its revised Cross-Industry Guidance on Outsourcing in December 2021.”
Finally, while significant regulatory change is not on the horizon with respect to cybersecurity and technology risk, organisations still need to take action. “There are significant external factors that require our clients across all sectors to critically assess their technology risk and cyber risk frameworks, to ensure their businesses are sufficiently resilient to withstand external and internal attacks and have ample contingency arrangements in place to withstand other shocks such as the impact of the current and potentially deepening energy crisis,” O’Brien concludes.