The global green economy has crossed a significant threshold. It now surpasses $5 trillion in annual value. The market is positioned as the world’s second-fastest-growing sector. Only the technology sector shows faster expansion.
A new report confirms this projection. The report was released by the World Economic Forum (WEF). It was produced in collaboration with the Boston Consulting Group (BCG).
The comprehensive study is titled “Already a Multi-Trillion-Dollar Market: CEO Guide to Growth in the Green Economy.” The report projects the dynamic sector will exceed $7 trillion by 2030. This represents $2 trillion in new growth over the next five years. This accelerated expansion occurs despite recent economic and geopolitical headwinds.
Pim Valdre, Head, Climate and Nature Economy, WEF, addressed these pressures. “Despite the current headwinds for global climate action,” Mr. Valdre stated, “this report shows that the green economy is not a distant opportunity but already a major growth engine of this decade.”
Key findings:
The study analyzed thousands of public companies worldwide. It delivers compelling evidence that green strategies yield superior financial returns. It argues that climate strategy and profit targets reinforce each other.
Since 2020, revenues from green business lines have grown twice as fast. They grew at a 12% compound annual growth rate (CAGR). Conventional revenues grew at only a 6% CAGR. This revenue premium exists across most major industry sectors.
Green economy-focused companies also secure better access to capital. Firms with substantial green revenues enjoy a lower cost of capital. This difference is significant, averaging 43 basis points.
Financial markets are fundamentally repricing risk. They recognize the long-term resilience of sustainable business models. Companies generating over 50% of their revenues from green markets enjoy further benefits. They command valuation premiums of 12% to 15% over their peers. This reflects strong investor confidence.
Patrick Herhold, Managing Director and Senior Partner, BCG, and report co-author, emphasized the breadth of the green economy opportunity. “The breadth of commercial opportunities in the green economy crosses industry and regional divides,” he said. “With $2 trillion in growth expected in the next five years, there are plenty more opportunities for companies to harvest.”
The cost collapse driving growth:
The exponential growth of the green economy is rooted in technological cost declines. These advances make sustainable solutions competitive with conventional alternatives.
Since 2010, the cost of key clean technologies has plummeted. Solar photovoltaics (PV) and lithium batteries have fallen by around 90%. Offshore wind costs have declined by roughly 50%.
These advances have flipped the economics of decarbonization. The report calculates that 55% of the global emissions reductions needed for a 1.5°C pathway is now achievable using cost-competitive solutions. An additional 20% can be addressed at only minor cost premiums. This is a transformative shift from a decade ago. At that time, low-carbon solutions required high price premiums.
Leadership and policy imperatives:
Global leadership in the green transition remains uneven. China is now the world leader in clean energy investment. The country invested $659 billion in clean energy in 2024. This eclipses both the European Union and the United States. China leads in patents for solar, EV, and battery technologies. It is set to finance 60% of new global renewable capacity additions through 2030.
However, challenges remain in hard-to-abate sectors. Technologies like low-carbon hydrogen and carbon capture, utilization, and storage (CCUS) are less mature. They require continued policy support and innovation to achieve commercial scale.
The report encourages executives to adopt a strategic playbook for success. It involves pushing for technology maturity and cost efficiency. It requires shaping favorable regulatory ecosystems. It necessitates unlocking smart capital for viable green projects.
The CEO playbook:
The CEO Playbook identifies three critical growth accelerators—beyond basic strategic alignment—that differentiate market winners from laggards in the $7 trillion green economy. These accelerators focus on pushing frontiers and unlocking external growth levers.
A. Scaling Technologies to Cost Maturity: Leading companies don’t just wait for technologies to mature; they actively drive the cost curve down through long-term commitment and scale.
i. Pioneer Offtake Contracts: Companies sign early, guaranteed purchase contracts for green products (like green steel or Sustainable Aviation Fuel/SAF). This demand commitment de-risks the investment for producers.
ii. Invest in Supply Chains: They commit capital to scale up the manufacturing and infrastructure required for new solutions, such as battery gigafactories or electrolyzer capacity.
iii. Integrate Digitalization: Digital tools and data analytics are used to optimize production processes and supply chain efficiency, which drives down the marginal cost of the green product.
B. Shaping Regulatory Ecosystems: Winners see regulation not as a constraint, but as a market-creation tool. They proactively influence policy to establish clear, stable rules that favor green investment.
i. Advocate for Clarity: Leaders push for the standardization of green definitions (like green hydrogen or green cement) to give investors and customers confidence.
ii. Support Carbon Pricing: They advocate for market-based mechanisms (e.g., robust carbon pricing or trading schemes) that level the playing field against high-carbon incumbents.
iii. Green Public Procurement: Companies work with governments to establish green public procurement standards, guaranteeing an early, high-volume customer for nascent green products.
C. Unlocking Diversified Finance: Successful CEOs move beyond traditional bank loans and leverage the full spectrum of climate finance to lower their cost of capital and promote green economy.
i. Blended Finance: They blend concessional finance (e.g., from development banks or climate funds) with private capital to make capital-intensive projects viable.
ii. Green Instruments: They tap into specialized instruments like green bonds or sustainability-linked loans (SLLs), which provide cheaper capital due to lower perceived risk.
iii. Investor Transparency: They provide investor-grade transparency on green revenues and climate impact, qualifying them for the expanding pool of lower-cost ESG-mandated capital.
Nature-based solutions:
The report emphasizes that nature-based solutions (NBS) are no longer just an environmental topic but a critical, value-driven component of the green economy that provides climate adaptation and resilience.
A. NBS as a Material Investment Area: The report identifies adaptation and resilience solutions as a rapidly growing segment, reaching over $1.1 trillion in annual investment. This includes:
• Resilient Infrastructure: Investing in natural buffers (like mangroves or restored wetlands) to protect coastlines and physical assets against extreme weather.
• Sustainable Food Systems: Implementing regenerative agriculture and sustainable forestry practices that sequester carbon, improve soil health, and strengthen food supply chain resilience.
• Water Management: Deploying natural systems for water storage, filtration, and flood management, which often proves cheaper than traditional grey infrastructure.
B. The Value Proposition of NBS: NBS is financially compelling because it generates both cost savings and new revenue streams:
• Risk Reduction: Restoring natural ecosystems helps companies mitigate physical risks (e.g., drought, flood) that could otherwise shut down operations or destroy assets.
• New Market Creation: NBS creates new commercial markets, such as high-integrity voluntary carbon markets and biodiversity credit markets, allowing companies to generate tradable assets from their stewardship activities.
• Supply Chain Resilience: Investing in nature-positive supply chains reduces reliance on increasingly stressed natural resources, which is crucial for sectors like food and timber.
Feike Sijbesma, Founder and Co-Chair, Alliance of CEO Climate Leaders, offered his perspective. He said, “Companies that lead today are not just future proofing; they are creating the markets of tomorrow.” The transition represents the defining growth opportunity of this decade.
