Report: Green Economy Expands Quickly, but Short-Term Risks Remain
Green products and services touched over US$5 trillion for the first time.
The global green economy is valued at US$7.9 trillion as of Q1 2025.
However, the sector is volatile in the short run and has high prospects for the long run.
Green equities have been auguring well for over a decade, even gaining 59% more than the FTSE All Cap Index, but the market is volatile in the short run, notes the London Stock Exchange Group (LSEG) report.
According to the report, the performance of green stocks has fluctuated over 12-month periods, affecting investor morale, but the equities might perform well in the long run.
Notwithstanding recent market challenges, the energy transition, more stringent sustainability regulations, and growing investments in climate technology and adaptation are providing a fillip to the green sector to regain stability, says the report.
READ MORE: Climate Tech Investment Rebounds in US: Silicon Valley Bank Report
Although at the beginning of 2024, green stocks saw a lackadaisical performance, they bounced back later in the year and even matched the overall market performance.
LSEG said, " Year-to-date, they have underperformed the market by 3% in challenging market conditions."
But expectations are flying high for the green sector. It is now a large and fast-growing part of global financial markets. The first quarter of 2025 logs its worth at $7.9 trillion, making up 8.6% of the listed equity markets. In 2024, revenues from green products and services surpassed €4.4 trillion, making the green economy the second-fastest growing sector after technology.
These industries, provided with excellent market conditions, will perform better than the market, but they tend to slump when things take a negative turn. This simply means that green investments perform well over time but could be erratic for the present.
The sectors expected to grow include climate technology and adaptation, clean energy, and electric transport, with vigorous investment opportunities in energy efficiency, electric vehicles, and related technologies.
The green economy will also pick up well in emerging economies, and green bonds will play a constructive role in financing the green transition.
ALSO READ: ESG in Developing Nations: Green Dreams, Tough Realities
To get a detailed view of the report, read 'Investing in the green economy 2025' here.
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Source: IPE
