Is The Green Economy The New ‘Tech’ Sector?

Is The Green Economy The New ‘Tech’ Sector?


By William Nicolle, Analyst, Sustainable Investment Research

Few industries can rival the technology sector’s growth, whose investable market cap grew fivefold over the last decade[1] – but as the investment landscape becomes ever more blustery, with the winds of further interest rate rises on the horizon, the green economy is emerging as a candidate. Growing rapidly, multi-faceted, and with green products and services permeating throughout markets, the green economy’s development increasingly resembles that of the tech sector.

Growing rapidly

As outlined in our recent paper, Investing in the Green Economy 2022, the market capitalization of green equities ballooned from under USD2 trillion in 2009 to over USD7 trillion by 2021, almost doubling its share of the global investable market from 4% to 7% (Figure 1).

Figure 1. The green economy almost doubled its share of the global market cap over the last decade.

Green economy the new

Putting this into perspective, the green economy is now the equivalent of the fifth largest industrial sector by market value (Figure 2) – larger than oil and gas, recently overtaking retail, and closing in on banks. The technology sector was in a similar position in 2008, after which it stormed to become the largest sector by 2015, a position it has held since.[2]

Figure 2. Size of ICB Supersectors vs. the Green Economy.

Green economy the new


Much like the range of different technology subsectors, from on-demand streaming to Fintech, green subsectors are equally diverse, spanning ‘classic’ green areas like renewable energy to lesser-thought-of subsectors like energy efficiency, recycling, and pollution reduction.

Some are expanding quickly (Figure 3) as green products and services disrupt the markets they enter, particularly the electric vehicle sector, fueled by the electrification of transport and the momentous rise of companies like Tesla. There are many other, less headline-grabbing areas too – take energy efficiency, whose rocketing market value is mainly driven by cloud computing, benefitting the technology giants, but also wider trends like growing energy demand and the need for cost reductions.[3]

Figure 3. Market value growth in selected green subsectors.

Green economy the new


Like technologies, green goods and services are permeating a wide range of industrial sectors (Figure 4). For instance, two-fifths of the autos sector by value is already green, fueled by the rise of electric vehicles which in turn drives growth across the value chain – spanning EV charging providers, battery manufacturers and lightweight material – in other sectors. Utilities and Industrials also have sizeable green segments, driven by the growing competitiveness of renewable energy and demand for pollution-reducing products and services.

Figure 4. The green economy is pervasive throughout other economic sectors

Green economy the new

Globally diversified

The green economy is globally diverse, albeit with a concentration in certain countries such as the United States (54%), followed by China (12%). The picture is different when we look at the green exposure, ie, how green is the economy. For example, while smaller in total size, Japan and European countries such as France and Germany have a higher exposure to the green economy. In fact, many countries are making green growth and green jobs a central pillar of their post-COVID growth strategy – another parallel the sector shares with technology. Evidence suggests that dollar for dollar, capital-intensive green investment tends to create more jobs than investment in polluting alternatives.

Figure 5. Like the technology sector, the US and China dominate the green economy by market cap.

Green economy the new

As the low-carbon transition accelerates the green economy may continue following in the technology sector’s footsteps – with green products and services continuously permeating throughout the economy, cementing its place as the newest industrial growth sector.[4]

[1] The technology sector increased its investable market cap by five times over the last decade; Total investable market cap of companies included in the FTSE Global Equity Index Series in the Technology ICB Supersector, between 2012 (USD4.0 trillion) and 2022 (USD19.2 trillion).

[2] The total investable market cap (end of year) of all companies included in the FTSE Global Index Equity Series (as of the end of 2021) with an ICB Supersector classification as ‘Technology’ grew from US1.9 trn in 2008 (5th largest ICB Supersector by investable market cap) to USD21.8 trillion in 2021 (largest ICB Supersector).

[3] Green sectors defined under the FTSE Russell Green Revenue Classification; For more details, see FTSE Russell (2020), Green Revenue Classification System 2.0.

[4] FTSE Russell (2022), The green economy in turbulent waters?

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