CEO Insights for What's Ahead | 11.30.22

Number of the Week: 7.2 Percent

According to The Conference Board?Consumer Confidence Index??for November, US consumers now expect prices to rise by?7.2 percent?over the next twelve months. A recent rise in gas prices—coupled with continued high food prices—has sent inflation expectations to their highest levels since July.?

The big picture:?Overall, the?Consumer Confidence Index??ticked down 2 points to 100.2 (1985=100) in November after also losing ground in October. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—moderated further, suggesting the economy has lost momentum as the year winds down.?

A gloomy outlook:?The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell 2.5 points to 75.4 in November. With expectations now well below the benchmark of 80, the short-term outlook remains gloomy, with the likelihood of a recession in the months ahead remaining quite elevated.

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How CEOs Can Turn Down the Noise and Focus on ESG Issues that Matter

With rising expectations and limited budgets, CEOs need to ensure their boards and executives are focused on #ESG areas that truly matter. A recent report, stemming from a roundtable discussion of leading CEOs, explains how to do that.

• First, look beyond the traditional “ESG materiality” assessment, which was designed for disclosure, and instead conduct a strategic analysis of where the company stands in ESG, where it wants to go, and how to get there in a fast-evolving landscape.
• Second, make the north star of your strategy where the firm can have the biggest?impact—on the company’s own welfare, that of their stakeholders, society, and the environment.
• Third, in assessing impact, consider the company’s role in three areas: 1) the products and services it offers, and purchases, in the?marketplace; 2) how it operates and treats employees in the?workplace; and 3) the actions it can take through government relations, communications, and corporate citizenship in the?public space.

These three steps can help the company maintain its focus amid a lot of ESG noise, effectively integrate ESG into its strategy, and efficiently serve?both?shareholders and society.

Read the report sponsored by KPMG, Morrow Sodali, and Weil, Gotshal & Manges??

Listen to the podcast??

Inflation Is Not Yet Denting Holiday Spending, but It Is Impacting What’s Bought

With inflation at 7.7 percent, many expect some depression in the holiday shopping season. But we are not seeing an impact yet. Walmart is predicting a 3 percent growth in Q4 and Black Friday just broke records ($9.12b online sales).

A tale of two shopping lists:?Despite strong spending overall, evidence is emerging that we might be entering a season where consumers carry two shopping lists driven in large part by inflation: Special treats will appear on a ‘fancy’ list and the ‘fillers,’ where perceived quality will be sacrificed for price, will be on another. A step down in price, an alternative brand, or a bundle offer will lead you to the filler list. Maintaining your cachet and premium quality will get you on the fancy list.

The marketer’s mindset to make merry:?There are three crucial marketing tenets to prosper in these times: Know what people are looking for, know what they are willing to pay, and find the best way of standing out and being so desirable that you will make it onto the shopping list.

Learn more about the Marketing & Communications Center??

Stay Ahead of the Curve by Building Your Human Capital Narrative Now

Companies should prepare for increased attention to human capital matters by building their human capital management (HCM) narrative now, including elements?beyond?what they are required to publicly disclose.?

Why it matters:?In addition to?current?SEC disclosure rules on human capital, more prescriptive SEC rules, increased regulation by other agencies, and litigation relating to oversight of a firm’s workforce are expected. But the benefits of telling the HCM story go beyond meeting mandated disclosure requirements. Numerous studies have linked greater HCM transparency with better business and financial outcomes. Where organizations meet increasing transparency demands from stakeholders, they often experience higher employee retention and engagement, greater customer loyalty, and more investor interest.?

The path forward:?By developing a clear narrative, businesses will not only be better prepared for external and internal attention to human capital matters but will be better prepared to take positive and preventative actions, such as ensuring the right people with the right skills are in place to achieve business goals.

Read the report??

QUOTABLE

“There are issues that, I think, because we are dealing with crises, where the new Congress will actually find issues to come together on. That includes funding bills...spending on research and development…there’s commonality on China…Iran, North Korea, cybersecurity issues…So, there are a number of areas where Congress can actually and probably will be working together.”

?—?Dr. Lori Esposito Murray , President of the Committee for Economic Development , the public policy center of The Conference Board (CED). Murray joined the?CEO Perspectives ?podcast for a conversation on how the results of the midterm elections—and a split Congress—will impact policy moving forward.

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