Understanding Green Tech

What is Green Tech?

-Green technology is an umbrella term that describes the use of technology and science to create products and services that are environmentally friendly. Green tech is related to cleantech, which specifically refers to products or services that improve operational performance while also reducing costs, energy consumption, waste, or negative effects on the environment.

Is Green Tech a Growth Industry?

- Green technology is undoubtedly a growth industry driven by increasing global awareness and the urgent need for sustainable solutions. As governments and organizations prioritize environmental policies, investments in clean energy, electric vehicles, and sustainable agriculture are booming. This surge in funding and innovation highlights the sector's potential for rapid expansion and possibly long-term profitability. Solar power was the fastest-growing power source in the U.S. in 2025. A record 37 gigawatts (GW) of solar energy capacity was installed in the U.S. in 2024, almost double the figure from 2023. 21 Moreover, consumer demand for eco-friendly products and services is high, propelling the green tech market forward. In a 2020 McKinsey survey, more than 60% of respondents said they’d pay more for a product with sustainable packaging. 22 Another study by McKinsey and NielsenIQ found that products making ESG-related claims saw more sales growth from 2017 to 2022, averaging 28% cumulative growth, compared to 20% growth for products that made no ESG-related claims. Companies that adopt and develop green technologies can potentially gain competitive advantages, attracting both customers and investors. This growing interest not only boosts industry revenue but also encourages further advancements, establishing green tech as a cornerstone of future economic growth.

How Do You Invest in Green Technology?

- The easiest way to invest in green tech is to buy stock in companies that are making major bets on environmentally-friendly technologies. Investors can attempt to identify individual stocks, or simply invest in a mutual fund, index fund, or another instrument that seeks to reflect the broader market for environmental investments. The advantage to the latter approach is that the investor will gain diversified exposure to the green tech industry, rather than the fortunes of a single company.