Report shows green economy set to overtake fossil fuel sector
A report produced by FTSE Russell, a key provider of stock market indices and associated data, shows that the green economy is now worth as much as the fossil fuel sector and offers more significant and safe investment opportunities, pointing towards even more significant growth in the future.
The green economy is defined as an economy that aims at reducing environmental risks and ecological scarcities, and that aims for sustainable development without degrading the environment.
The green economy is also characterized by being efficient, clean, circular, collaborative and low carbon. As such, it is central to achieving the key objective of the Paris Agreement on climate action.
Presently, the green economy is worth as much as the fossil fuel sector with 6% of the global stock market, roughly $4 trillion USD, coming from the clean energy, energy efficiency, water, waste and pollution services.
If the sustainable economy maintains its current course, it could represent as much as 10% of the global market value by 2030, assuming around $90 USD trillion in green investment have been made by then.
FTSE Russel found that, over the last five years, green companies generated higher returns than the broader stock market. The report finds large investment opportunity, backed by global efforts to combat climate change and broader environmental challenges.
The FTSE Russel report finds the green economy has spread across companies of various size, nature, and geographical range in contrast to fossil fuels which has shrunk. Still, more work is required to keep the global economy on track to meet the Paris agreement goals.
The report analyzes a broad range of products and services from different sectors. Findings were based on the impact of these factors on climate change mitigation and adaptation, water, resource use, pollution, and agricultural efficiency.
In terms of diversification, large companies lead the way by representing roughly two thirds of the total green market value. Similarly, small and medium sized firms now represent a larger number of green companies.
The energy industry, a very diverse segment ranging from building insulation to cloud technology, makes up more than half of the green economy with food, agriculture, water and transport being other important sectors.
The report, Investing in the global green economy: busting common myths, is available here.