European companies that accelerate both their digital and sustainability transitions are likely to recover faster and emerge stronger from the COVID-19 crisis, according to a new report from Accenture. It finds that European business leaders expect to return to their pre-pandemic profit levels in 18 months on average.

According to the report, the COVID-19 crisis has resulted in a divergence in European companies’ resilience and growth prospects:

• Half (49%) of European companies have been reporting revenue or profit decline for the past 12 months and don’t expect any improvement in the next 12 months.

• One-fifth (19%) of European companies had strong financial performance before the pandemic but now expect negative revenue or profit growth in the next 12 months. The report refers to these companies as “falling angels.”

• One-third (32%) of European companies expect to deliver profitable growth in the next 12 months. The report refers to these companies as “tomorrow’s leaders.”

The report indicates that companies leading in both digital adoption and sustainable practices are nearly three times more likely than other companies to be among “tomorrow’s leaders,” thereby recovering faster and emerging stronger from the crisis.

According to the research, nearly half (45%) of European businesses are prioritizing investment in both digital transformation and sustainability. Specifically, 40% of European respondents plan to make large investments in artificial intelligence, 37% plan to make large investments in cloud, and 31% are rebalancing their investments to focus more on sustainable business models.

The report notes that less than half (45%) of European businesses expect to achieve their 2021 growth targets. Those in the United Kingdom, France and Germany are among the most optimistic, with 59%, 52% and 51% of respondents in those countries, respectively, expecting to achieve their 2021 targets. Respondents in Italy and Spain are among the most pessimistic, with only 34% and 31% of them, respectively, expecting to hit their 2021 growth targets.