Digital sustainability: It pays to be a leader, not a laggard 

The two biggest business mega-trends over the past couple of decades have been digitization and sustainability. A huge amount of management attention and organizational resources has been allocated to each area, with companies seeking competitive advantage through complex transformations or rushing to comply with environmental legislation. Are these efforts worth it from a stock market perspective? Do investors care? That is, do they allocate a price premium to the shares of companies that perform above the average compared to their industry peers when it comes to digitization, sustainability, or both? These are the questions we seek to answer here.

We examined the market value performance of 154 firms that were continuously part of the S&P 500 from 2007 to 2021 and linked it to assessments of digitization and sustainability maturity for firms in each given year.

Digital sustainability quadrants and paths

From the results, we were able to break down firms into four…