Returns of $7.2 Trillion Green Sector Outpaced Only by Tech Stocks

If the companies that derive revenue from products and services that help reduce carbon emissions were taken as a single industry group, they would have had the second-best financial performance of any equity sector over the past decade.

Only the technology industry, which has seen outsized growth, buoyed most recently by breakthroughs in artificial intelligence, surpassed the total returns of 198% generated by the so-called green economy over the past 10 years, according to a report from London Stock Exchange Group Plc. And within the green complex, companies focused on energy management and efficiency were the best performers, with renewable energy, the “most visible” green economy component, a “conspicuous laggard,” LSEG reported.

While the $100 trillion-plus price tag for transitioning the world economy away from fossil fuels to low-carbon energy sources will create substantial opportunities for investment, financiers have made clear private capital will only be deployed if the returns make sense. And though the AI-fueled tech boom is currently the center of investors’ attention, over the long term the green transition is a “mega force” to be reckoned with, LSEG said.