FTSE Russell Study Highlights Investment Opportunities in Green Economy
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The green economy represents 6% of the global stock market, or around US$4 trillion, coming from clean energy, energy efficiency, water, waste and pollution services.

The energy industry makes up more than half of the green economy, with food, agriculture, water and transport also being important.

Over the last five years, green companies generated higher returns than the broader stock market.

8 June 2018: The green economy is worth as much as the fossil fuel sector, and provides safer investment opportunities, according to a report published by FTSE Russell, a provider of stock market indices and associated data. The report titled, ‘Investing in the Green Economy: Busting Common Myths,’ aims to help investors to better understand their interactions with the green economy.

It also seeks to assist investors in developing investment strategies by measuring, in a quantifiable manner, the transition towards sustainability.

The report identifies a large investment opportunity in the green economy, backed by global efforts to combat climate change and broader environmental challenges. The green economy, according to the report, aims to achieve sustainable development without degrading the environment, and be efficient, clean, circular, collaborative and low carbon. Thus, it concludes, the green economy is critical for achieving the goals of the Paris Agreement on climate change.

The report finds that the green economy represents 6% of the global stock market, or around US$4 trillion, coming from clean energy, energy efficiency, water, waste and pollution services. It notes that it could increase to 10% of global market value by 2030, assuming approximately US$90 trillion in green investments by that time. The report also determines that, over the last five years, green companies generated higher returns than the broader stock market.

The green economy could increase to 10% of global market value by 2030, assuming approximately US$90 trillion in green investments.

According to the study, the green economy is diversified by: company size, with large companies representing two thirds of green market capitalization; sector, including industrials (the largest), followed by utilities, technology, chemicals, and construction and materials; and geography, with the US, Japan, Europe and China leading the pack. The report finds that around 3,000 globally listed companies are exposed to the green economy.

The publication analyzes a range of products and services from different sectors in renewable and alternative energy, energy efficiency, water, and waste and pollution, based on their impact on climate change mitigation and adaptation, water, resource use, pollution, and agricultural efficiency.

According to the report, the energy industry makes up more than half of the green economy, with food, agriculture, water and transport also being important. It explains that high-tech and renewables also have major roles to play, specifically through the cloud computing technology, which can help companies reduce carbon emissions by up to 90%.

The report also highlights the rapidly growing use of solar and hydroelectric power, and resources such as lithium for batteries, and organic foods or seeds that boost agricultural yields as critical to the green economy. [Publication: Investing in the Green Economy: Busting Common Myths] [UNFCCC Press Release]

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