Green economy tops US$10 trillion as revenue growth accelerates

[LONDON] The green economy – the business lines of globally listed companies that generate revenue from climate solutions – now boasts a record-high market value of US$10 trillion.

Revenue tied to environmental products and services climbed to US$5.5 trillion last year, expanding at its fastest pace since 2022, a report published on Wednesday (Jun 17) by the London Stock Exchange Group (LSEG) showed.

Investors have rewarded that growth: Companies deriving over 20 per cent of their income from green activities have been outperforming the broader equity market, LSEG said.

The S&P Global Clean Energy Transition Index has surged more than 80 per cent since the end of 2024; this is more than double the return of the S&P 500.

Despite rising geopolitical tensions and a retreat from climate priorities in some major economies, led by the US, green industries have proved remarkably resilient.

That is partly because the energy transition is entering a new phase driven as much by security and economic competitiveness as by decarbonisation, LSEG said.

Jaakko Kooroshy, global head of sustainable investment research at LSEG, said that for investors who have soured on green stocks, the industry’s recent growth should create “an urgency to have another look” and reassess their exposure.

LSEG defines the green economy as the proportion of companies’ revenues generated from environmental solutions, ranging from renewable energy and clean water to energy efficiency and recycling.

It assessed the revenue exposure to green business activities of more than 21,000 companies globally.

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Revenue growth was broad-based over the past year, with 99 of 133 categories of green products and services posting gains. Electric vehicles and so-called advanced batteries were “a particular bright spot”, adding US$62 billion of revenue, LSEG said.

LSEG also examined mergers and acquisitions (M&A), which it said are “becoming an increasingly critical mechanism for accelerating the low-carbon transition”.

Green-related M&A totalled US$4.1 trillion over the past decade, accounting for almost 13 per cent of total global deal value, the company found.

Dealmaking has continued this year, led by NextEra Energy’s agreement to pay about US$67 billion in stock for Dominion Energy.

Kooroshy said that the proposed transaction would create “one of the largest green energy behemoths in North America”. “It’s not a green pure play, but it’s a huge green energy company that’s forming there.”

Together, NextEra and Dominion would generate more than US$15.9 billion of green-related revenue from wind, solar, nuclear and battery storage, LSEG said.

That would represent about 36 per cent of the combined companies’ total revenue. BLOOMBERG