According to the FTSE Russell annual report, the green economy is now worth as much as fossil fuel sector. As a substantial and growing market sector, the green economy provides a significant opportunity for investors.
The key features of the green economy, based on FTSE Russell’s calculations, are as following:
It’s substantial: The green economy represents 6% of the market capitalization of global listed companies, approximately US$4 trillion. This represents a significant investment opportunity, approximately the same size as the fossil fuel sector.
It’s growing: The green economy proportion of the global market capitalization is growing, while the fossil fuel sector shrinks.
It’s diversified: The green economy is diversified by company size. While small and mid cap companies have a greater green exposure and represent a larger number of green companies the market is by no means small and mid cap dominated; large cap companies represent approximately two thirds of green market capitalization.
It’s multifaceted: The green economy is diversified across ICB2 Sectors. Industrials are the largest element, followed by Utilities, Technology, Chemicals, and Construction and Materials. This highlights the diverse nature of goods and services addressing environmental challenges.
It’s global: The US is the largest element of the green economy; however Japan and Europe have the highest green exposure. While China is the third largest element of the green economy; its green exposure is underweight but growing rapidly.
It’s outperforming: Green companies have shown outperformance with FTSE Russell’s broadest green indexes outperforming their parent benchmarks over the last five years.
Take a look at the complete report here