“The green economy presents a generational investment opportunity,” says Jaakko Kooroshy, global head of sustainable investment research at LSEG. He tells The Edge Singapore that returns from the FTSE EOAS index have outpaced every sector bar technology over the past decade.
Since 2008, the FTSE EOAS index has outperformed the benchmark FTSE Global All Cap by 133%. The report adds that as of the end of April this year, the 12-month relative performance of the EOAS stood at 12.4% above the market, which broadly aligns with the sector’s long-term trends.
The report suggests that investors are becoming more focused on profitability and other economic drivers rather than the environmental impact of the green economy and companies. A common concern among investors is whether companies generating green revenues face a trade-off between profitability and green objectives.
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LSEG investigated this relationship, comparing the ebitda margin of more than 4,000 constituents of the FTSE All-World Index with the median ebitda margin of peer companies in the same industrial classification benchmark super sector.
The analysis suggests there is no linear trade-off between margins and green revenue exposure. Companies with green revenue shares above 50% — typically pure plays or incumbents that have made significant progress in their transition — generate ebitda margins that are, on average, 2%-4% above the sector median.
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Despite market volatility, the relative ordering of green revenue bands remained broadly consistent from 2017 to 2025, challenging the idea that green revenues are inherently margin-dilutive.
The report also notes that companies where green products and services account for a smaller share of revenue tend to have margins that underperform sector peers by two and three percentage points. LSEG believes these businesses have invested in new products and business lines, but have yet to achieve sufficient scale to improve margins.
Sectors gaining more attention include the energy system and growing demand from AI, data centres, transportation and industry. The current energy shock could further accelerate this shift, as it highlights the scalability and energy security benefits of many green technologies, suggests LSEG.
Overall, the green economy, or associated market capitalisation of 21,000 listed businesses offering green products and services, surpassed US$10 trillion ($12.9 trillion) for the first time in 4Q2025, adds the report.
In its seventh edition, the report continues to analyse green investment opportunities and the evolving green transition, examining the size, growth, performance and financing of the global green economy across asset classes.
The green economy comprises companies providing products and services with environmental benefits, from renewable energy and clean water to energy efficiency and recycling services. These solutions, which are diverse across value chains and industries, address climate change as well as broader environmental challenges.
The publication also reveals that revenues from green products and services of these firms grew by 5.3% to approximately US$5.4 trillion, the fastest pace since 2022.
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The growth was broad-based and led by energy efficiency, transport equipment and renewables, with 99 out of 133 types of green products and services experiencing revenue growth.
In particular, renewables — historically a weaker-performing green segment — were the strongest performer, outpacing energy management and efficiency.
This came despite challenges, including the rollback of much of the US Inflation Reduction Act’s clean energy support.
Meanwhile, electric vehicle (EV) manufacturing saw the largest expansion in absolute terms among all green sectors, with revenues increasing by US$62 billion in 2025. “With over US$5 trillion in green revenues and US$10 trillion in green market capitalisation, we are talking about a large, diversified sector with multiple growth drivers,” says Kooroshy.
More broadly, if considered a standalone industry, the green economy would have overtaken healthcare for the first time in 2025 to become the third-largest industry by market capitalisation, behind technology and the industrial goods and services sector. It now accounts for 9.9% of global listed equities.
On a related note on investment opportunities, capital flows to the energy sector are projected to grow to US$3.4 trillion in 2026, a 5% rise from 2025, notes a separate report by the International Energy Agency.
Around US$2.2 trillion is expected to go collectively to renewables, nuclear, grids, storage, low-emissions fuels, efficiency and electrification, with US$365 billion or US$1 billion every day, to solar projects.
Green trend
Beyond equities, investors have been taking a multi-asset approach towards green thematic investing, says the LSEG’s report. In particular, infrastructure is a significant component of this trend.
Using the FTSE Green Revenues Select Infrastructure and Industrials index, the report showcases that the green infrastructure index has outperformed the broader infrastructure market since 2020.
The LSEG report suggests that green infrastructure strategies, which provide greater exposure to physical assets and industrial activities, may appeal to investors seeking to navigate concerns around potential AI disruption.
Asia leads the way
The report notes that the green transition has become more complex as protectionist policies, economic uncertainty and persistent geopolitical tensions — including the Ukraine-Russia war and the conflict in West Asia — heighten concerns over energy security, supply chain resilience and economic competitiveness.
LSEG suggests that tariffs, export restrictions and onshoring of green technologies could potentially increase fragmentation across the global green economy as supply chains for clean energy and critical materials are becoming more concentrated and globally interconnected. It also points out that the global energy system is becoming more diversified, with renewables, nuclear, LNG, and emerging technologies such as hydrogen gaining market share.
On a regional basis, Asia accounts for a world-leading US$2.5 trillion, or 47%, of revenues of the global green economy in 2025, up three percentage points y-o-y. Led by China, Japan, Hong Kong and South Korea, Asian businesses have generated the world’s most green revenues since 2016, in sectors such as energy equipment, transport equipment and waste and pollution control. China generated more than half of global green revenues in EV batteries and railway infrastructure, highlights the report.
Overall, Asia’s green revenues have grown at a 12% CAGR over the last five years, outpacing the global market (10%). Asia is not only the leader in green revenues, but is also driving the energy transition through supportive government policies and planning, clean energy adoption and investment, the report says.
It also leads in clean energy investment, with China alone deploying US$625 billion across renewables, energy storage, nuclear and energy efficiency, accounting for over 30% of global investment, according to the International Energy Agency (IEA). India follows with around US$100 billion of clean energy investment, representing 83% of its power sector capital allocation.
Despite its push toward renewables, Asia remains heavily dependent on imported fossil fuels from the Middle East. Coal continues to play a central role in the region’s energy mix, while Asia remains the largest driver of global coal investment and demand. China, India and Southeast Asia are the world’s three largest coal consumers.
With recent oil price spikes, several Asian countries, including Thailand, the Philippines, India and Bangladesh, have increased coal-fired power generation despite calls for an accelerated shift towards renewables. The region faces a dual challenge to accelerate clean energy deployment and maintain reliable and affordable energy systems, says LSEG.
Singapore’s outsized green impact
The city-state, with approximately 0.07% of the global population, accounts for 0.55%, or US$31 billion of global green revenues, punching above its weight. It is also among the fastest-growing green economies in Asia, with a five-year CAGR of 19%.
According to LSEG, Singapore’s green revenue share in the local Straits Times Index reached 10.9% by end-2024, surpassing global averages and leading in sectors like energy and real estate.
Out of the 30 constituents on the STI, there are 18 with green revenues. Some of the names on the index that earn green revenue include Keppel Corp, Seatrium, Sembcorp Industries, ST Engineering, Wilmar International, as well as most of the real estate-related counters in the index.
In addition, numerous non-constituent Singapore companies derive earnings from green products and services. These include ComfortDelgro, CSE Global, Marco Polo Marine, Oiltek International and Sanli Environmental, among others.
“The green economy presents a significant opportunity for Singapore with green products and services seeing particularly dynamic growth across Asia,” says Kooroshy.
“Singapore is already leaning into these opportunities in areas such as green real estate, but also by seeking to establish itself as a centre for green finance and investing across the region.”
