Dive Brief:
- Green revenue expanded at the fastest pace since 2022 last year, increasing by 5.3% to $5.5 trillion, according to the London Stock Exchange Group’s seventh annual Investing in the Green Economy report which tracks more than 21,000 listed companies and 133 types of green products and services.
- The FTSE Environmental Opportunities All Share Index, comprised of s companies with over 20% green revenues, outperformed the market by 12.4% from May 2025 to the end of April 2026, according to the report. The index has also broadened in recent years, with 1,208 constituents compared to 612 in February 2022.
- The past decade has seen the flow of $4.1 trillion in green mergers and acquisitions over the past decade, representing 13.4% of global deals for this period, per the report. In 2025 green M&A reached $308 billion, accounting for 12.6% of global M&A deal value.
Dive Insight:
LSEG’s latest report found revenues expanding across 99 of the 133 categories of green products and services it tracks. If considered as a standalone sector, at $10 trillion in market capitalization, the green economy would have overtaken health care last year to become the third largest industry, behind technology and industrials, the report said. The green economy now counts for 9.9% of global listed equities.
In spite of policy changes such as withdrawal from the Paris Climate Agreement and other agreements, and backtracking on the Inflation Reduction Act’s clean energy funding, the United States is still the largest green market by value, with 57% of global green market capitalization. It has also become the largest market for corporate clean power purchasing agreements, with Meta, Amazon, Google and Microsoft together accounting for 49% of clean power PPA deals in 2025.
“The green transition is entering a new phase — one defined as much by energy security and economic competitiveness as it is by decarbonisation,” said Jaakko Kooroshy, LSEG global head of sustainable investment research, in a press release provided to ESG Dive.
Since 2008, the green economy has outperformed global equities by 133%, with a compound annual growth rate of 18%, while the broader market has grown at 12%, according to the report. That growth rate has accelerated in recent years; from 2023-2026, the compound annual growth rate for the green economy was 13%, nearly double the growth rate during 2020-2023.
Green bond issuances reached a record $605 billion in 2025, representing a 5.7% increase from the year prior, with corporate bonds accounting for 68% of issuances, the report found. Energy management and efficiency was the sector with the greatest amount in bonds, accounting for 34% of the $3.3 trillion in total outstanding green bond amount as of Q1 of this year.
When compared to non-green peers among 4,000 FTSE companies, firms with more than 50% green revenues generate 2-4 percentage points higher earnings before interest, taxes, depreciation, and amortization. But those with less than 50% green revenues tend to underperform non-green peers, which LSEG said could reflect the costs of early-stage diversification and green transition, the report authors hypothesize.
Because of high up front costs, green deals tend to be larger than non-green transactions, the report found. Between 2023 and 2025, the average green deal size was $257 million, compared to $150 million for non-green deals. Green M&A is also predominantly driven by companies that already generate green revenues, the report found, with only 4% of non-green acquirers buying green assets. The industrials and utilities sectors represented more than half of total green deal value, at $176 billion, and deals in the utilities sector are mostly green, 71% by deal value.
