Green economy gathers pace to surpass $10 trillion

New research from the London Stock Exchange Group (LSEG) has found that the green economy has surpassed $10 trillion for the first time. The seventh edition of LSEG’s ‘Investing in the green economy’ report, which analysed more than 21,000 listed companies globally, reveals that despite energy shocks, policy divergence, and market volatility, the green economy accelerated past the $10 trillion mark in market capitalisation last year[i].

The green economy encompasses companies that provide products and services with environmental benefits, such as renewable energy, clean technologies, sustainable materials, and recycling services. These solutions, spanning multiple value chains, industries, and markets, aim to address climate change as well as broader environmental challenges.

LSEG finds that in 2025, revenues from green products and services grew by 5.3%, the fastest pace since 2022. Notably, the renewables sector (which has historically been a weaker-performing segment of the green economy) performed the strongest, outpacing energy management and efficiency.

Strong returns from green equities

The research also analysed the performance of the FTSE Environmental Opportunities All Share (EOAS) index, a basket of equities with more than 20% green revenues. It found that the index experienced significant volatility from the beginning of 2025 onwards- particularly during the Q1 2025 tariff shock and the initial market response to the Iran war in March 2026[ii]. Even so, these episodes were followed by sharp rallies, pushing 12-month relative performance to 12.4% above the broader market by the end of April 2026.

Previous energy shocks in 2022 saw both global markets and the majority of sustainable investment indices underperform, with EOAS ending the year 6.2% behind the market. While there are fears that the Iran war may have a similar impact, LSEG states that the index is positioned differently in 2026 than in 2022 to withstand a similar period of turbulence. It is broader, with 1,208 constituents in February 2026 (compared to 612 in February 2022), and less concentrated, with a 5.1% overweight in Technology versus 11.2% in 2022.

Additionally, the researchers note that investors are increasingly looking beyond the environmental drivers of the green economy and instead focusing on economic drivers. They highlight growing interest in the electrification of energy systems, and rising demand driven by AI, data centres, transportation and industry.

Long-term growth in the green economy has outperformed the overall market, and its performance over the last 12 to 18 months broadly aligns with these long-term trends. Since 2008, the FTSE EOAS index has outperformed the benchmark FTSE Global All Cap Index by 133%. If considered a standalone industry, EOAS would rank as the second-best-performing sector over the long term, behind only Technology

“What we are seeing is the emergence of the green economy as a core driver of global growth – a US$10 trillion opportunity, supported by broad-based revenue expansion, strong long-term performance, and deepening capital markets,” comments Jaakko Kooroshy, Global Head of Sustainable Investment Research at LSEG[iii].

References

[i] Investing in the green economy 2026

[ii] Ibid

[iii] Investing in the green economy 2026: Resilience and reacceleration | LSEG

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