FTSE Russell has been busy dispelling some myths around sustainable investment, seeing an opportunity diversified across company size, geography and sector and delivering outperformance of the global equity market in a report.

Based on FTSE Russell’s calculations the green economy now represents 6 per cent of the market capitalisation of global listed companies, at approximately USD 4tr - approximately the same size as the fossil fuel sector. As the green economy proportion of the global market is growing, the fossil fuel sector is shrinking.

Launched in 2016, the annual green revenues data model provides a framework for tracking the transition to a green economy, capturing products and services in renewable and alternative energy, energy efficiency, water and pollution.

As a concept, the report finds the green economy diversified across ICB2 Sectors. Industrials are the largest element, followed by utilities, technology, chemicals, and construction and materials. Also the report notes its global appeal, with the US is the largest element of the green economy; with Japan and Europe having the highest green exposure. China is the third largest element of the green economy; its green exposure is underweight but growing rapidly.

The report comes as FTSE Russell launch a new sustainable investment programme - STEP Change, an acronym for Stewardship, transition and engagement programme with the goal of raising global standards in sustainable investment by encouraging investors to build ESG into core indexes and benchmarks.

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