Is corporate sustainability a value-increasing strategy for business?

A new movement reconciling corporate sustainability and investment is gaining world-wide attention. Whether corporate sustainability has an impact on market value is examined using large US non-financial firms from 1999 to 2002 in this paper. Taking Tobin's q as the proxy for firm value, a significantly positive relation between corporate sustainability and its market value is found. We also find a strong interaction effect between corporate sustainability and sales growth on firm value. Moreover, there is evidence to support that being sustainable causes a firm to increase its value. This indicates that companies with remarkable sustainable development strategies are more likely to be rewarded by investors with a higher valuation in the financial markets.