The green transition is not an idealistic vision – it is a key engine of economic growth
- katariinakoivula
- 13 hours ago
- 3 min read
In an essay published in Helsingin Sanomat, author J. P. Laitinen claimed that green economic growth is a utopia. However, economic growth and emission reductions are not mutually exclusive. The relationship between the economy and the environment depends primarily on the type of growth pursued and the methods used to achieve it. In the EU, emissions have fallen by 37% since 1990, while GDP has increased, despite the uncertain state of the global economy.
The green transition is not merely a climate action. It is also an opportunity to improve productivity and competitiveness. A comprehensive review of more than 2,000 empirical studies shows that there is a positive or at least non-negative relationship between responsible (ESG) investing and corporate financial performance, strengthening the economic case for ESG investing (Friede, 2015). Companies with a high share of green revenues—defined as the portion of a company’s turnover generated from climate- and environmentally beneficial business activities—achieve, on average, higher stock returns (Bassen, 2023).
(ESG and financial performance: aggregated evidence from more than 2000 empirical studies (Friede et al. 2015))
As energy production becomes cleaner, companies’ costs decrease in the long term. Renewable energy reduces dependence on imported fuels and makes energy prices more predictable.
Laitinen is right in his essay in noting that the production and transportation of goods require raw materials that generate carbon dioxide emissions. However, raw materials can be produced more sustainably using new methods, provided that innovation is properly encouraged. Recyclable materials are a clear example of more sustainable consumption, such as recycled plastics, metal recycling, textile recycling, and regenerated fibers. It is clear that much more action is still needed, and the timeline must be accelerated.
It is also true that economic growth cannot be fully decoupled from the carbon emissions of business activities. Carbon neutrality and net negativity cannot be achieved through emission reductions alone. Unavoidable emissions must be compensated with verified climate actions that support a sustainable transition. Contrary to Laitinen’s claim, in this equation, ‘Finland Maiden’ is not sawing off its own branch, but rather growing new shoots and creating economic growth in its forests. The voluntary carbon market plays a key role in this (BCG, 2025; EY, 2025; BloombergNEF, 2025).
Laitinen’s conclusion regarding the future drivers of economic growth, as discussed by Sixten Korkman and Daniel Susskind, is distorted. Neither Susskind nor Korkman argues that growth will be completely emission-free; rather, they emphasize that the structure of growth is what matters. The green transition steers innovation. When emissions are priced, pollution becomes costly. This direction has been shaped, among other things, by the European Emissions Trading System and the voluntary carbon market. These mechanisms also enable immaterial (intangible) economic growth.
In a study of Swedish listed companies, sustainability practices are positively associated with stronger financial performance when performance is measured by earnings yield, return on assets, return on equity, and return on invested capital (Pham et al., 2021). The green transition is not an enemy of economic growth, but its engine, and climate policy acts as a force that accelerates this development.
The claim that reducing emissions stifles economic growth is overly simplistic. When implemented properly, the green transition increases both productivity and well-being. Negativity, inaction, and lack of belief will not save the climate.
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