now checking the economy. There are two big topics
this year at the World Economic Forum. KPMG is
a big four global professional services firm with more than
36,000 people in the United States. Earlier, I
sat down with paul, the U. S.
Chair and Ceo of KPMG who came to us from
the World Economic Forum to discuss the major challenges that
are taking center stage this year. Take a look
. So there's no doubt that tech talent and E
. S. G remain really important and there are
major themes that Davos is here. You think about
cooperation and fragmented world technology is something we need to
cooperate on and certainly we're all focused on talent in
this highly competitive environment and E. S. G
in the form of climate sustainability remain major topics here
at Davos. Yeah, I'm glad you brought up
E S. G. Because obviously it's a major
focus as investors prioritize social and environmental issues amid this
climate crisis. So how are you seeing companies respond
to this in such an economically volatile world? Well
, certainly companies have long term objectives when it comes
to sustainability. And so at KPMG we're helping clients
with their decarbonization strategies. We're helping prepare those companies
to be ready to report metrics in the future.
Some of them are reporting them today and in some
cases were actually attesting to what these companies are presenting
in terms of their E. S. G type
metrics. So, you know, we we are
hearing a lot about climate sustainability, we're hearing a
lot this week in particular about the future of reporting
E. S. G. Metrics and the standards
that are gonna use to do that. Yeah paul
I also want to circle back to something that you
mentioned technology now here in the US we've obviously seen
the tech sector rocked by a pullback in digital ad
spending. We've seen a spate of layoffs across the
sector. What's your reaction to the state of the
economy there and how our leaders at Davos addressing this
? Well certainly there's been a lot of growth and
rapid growth and technology sector and to some extent some
of those workforce reductions are recalibration just for the present
environment, given all the hiring that had been done
over the last 12-24 months, I do believe that
leaders are looking at opportunities. There's so many emerging
technologies that are being discussed this week from Blockchain to
quantum computing and so that emerging technology is really in
focus and in particular the cyber risk around emerging technology
have gotten a lot of attention at Davos this year
and absolutely it's the case that the digital acceleration the
digital transformation companies are doing in their acceleration of that
transformation remains a really hot topic at Davos. Now
another thing you mentioned was talent, the future of
work, there are many companies now implementing return to
work schedules for their employees. Do you think in
the future this hybrid room will work lifestyle will continue
. Is it a thing of the past. What's
your take on it? I I do believe Chloe
that the hybrid remote work environments will be likely permanent
. So that's just my view that we we have
understood for those types of employees that can work from
home that they can work remotely for part of the
at KPMG for instance. And then we gather with
purpose during other parts of the week but certainly remote
working or working from home will remain I believe for
the foreseeable future an important part of a hybrid work
environment. I think that's gonna be true for most
companies where employees can do their job from home.
Great insight there, paul Now I want to talk
about K. P. M. G. S
data from its latest M. And a outlook survey
of course we've seen kind of a collapse in investment
banking here across the industry which we're getting more insight
into as we see major banks report earnings. What's
your reaction to the survey? And is there anything
that came out of it that surprised you? Yeah
I wouldn't say it really surprised because we've seen inactive
M. And a. Markets for the last few
months. We think that the market will improve in
the latter half of 2023. We do believe that
deal sizes will be smaller in nature but still significant
deals. And we also know from other surveys we've
done that many C. E. O. S
want to do transformational M. And a to really
change their enterprises in a significant way and those will
be more significant acquisitions were also continued to see a
number of companies divesting of certain parts of their enterprise
. So I think the M. And A market
will be more active In the last half of the
year, although deal size is somewhat smaller. I
think the other thing that gives us confidence that will
be a more active in the market coming into going
into the future is that there's still a lot of
cash on the sidelines that can be invested in companies
and technologies and Paul. What other factors and indicators
could impact the deal market moving forward into 2023?
Well there's no doubt Chloe that higher interest rates are
going to be something that we all have to navigate
. I think higher interest rates are going to persist
for some period of time. The kind of natural
forces in the market are pushing on inflation to the
point where it's possible that 2% is no longer a
realistic target. It's possible that that could be the
case then we may have to live with a little
higher inflation going forward because of climate change is affecting
food costs because of some structural imbalances in the labor
market that might cause wages to be somewhat higher into
the future. So I think we're gonna have generally
higher rates but not necessarily the levels they are today
. They may come down somewhat but likely not real
fast. That will certainly be a challenge we continue
to navigate in the future, thanks again to paul
, cannot chair and Ceo of KPMG.