Reframing ‘making good money’ for the energy transition

The phrase “making good money” carries more than one meaning.

In one sense, common in financial circles, it simply means making a lot of money. But there is a broader, more generative interpretation: making money well. That is, achieving commercial success while advancing the common good.

This dual meaning has become particularly relevant in the context of the global energy transition. As we undertake the massive task of decarbonising the global economy, new pathways are emerging where commercial performance and societal benefit can be mutually reinforcing. Understanding where these pathways lie - and how to capture them - is a strategic imperative.

Value creation: Beyond financial returns

At its core, making good money depends on generating value. That includes financial value, as reflected in metrics like Enterprise Value (EV) relative to Capital Employed (CE). A company whose EV exceeds its CE is, in simple terms, worth more than it costs to build, a rough but useful signal that value has been created.

But to understand what drives this value, it helps to look more closely.

We can decompose the value ratio into two main components:
EV / CE = ROCE × P/E

• Return on Capital Employed (ROCE) captures how efficiently current earnings are being generated from past investments.
• Price-to-Earnings ratio (P/E) reflects the market’s view of future opportunity; how much growth investors expect, and how confident they are in the company’s ability to deliver it.

A high value ratio, therefore, implies a business that not only performs well today but is also positioned to grow, sustainably and competitively, into tomorrow.

This framing is particularly relevant in the energy space, where both past investments and future expectations are under intense scrutiny.

Where the growth lies

Energy transitions offer fertile ground for sustained, exponential growth, and this is not hypothetical; it is already happening. Consider the historical growth of solar power or electric vehicles, both of which have sustained double-digit global growth over a decade or more. These are not marginal shifts; they are system-level transformations.

What’s more, these waves of growth often follow a familiar pattern. Once enabling technologies mature, early demand emerges, and supportive policy environments take shape, the conditions are set for rapid acceleration. First movers who recognise and prepare for this moment, when “the stars align”, often reap outsized rewards.

This has been true in the past (e.g. the early rise of LNG) and is playing out again today in areas like solar power and battery storage.

The early mover opportunity

However, growth alone is not enough. To make good money financially, companies must also build durable competitive advantage. In transition markets, this is typically achieved by:
• Securing favourable supply chain positions
• Establishing an early presence in advanced or premium markets
• Aligning with early policy tailwinds that shape market access or cost curves

Tesla and NextEra Energy, for instance, have not just ridden the wave of energy transition; they helped shape it. Their early investments, strategic positioning, supply-chain orchestration and strong narratives gave them a defensible edge.  They have generated substantial financial value while also advancing energy transitions more broadly.

While the regret of moving early may be a temporary period of underperformance, the regret of moving too late could mean failing to generate attractive financial value altogether. This has already happened with several latecomers to transition, left licking their wounds as they fail to secure commercially attractive strongholds. 

Finding the sweet spots

Much of the value in energy transitions will be unlocked not through broad commitments, but through targeted action in areas where growth and advantage intersect.

Fortunately, these “sweet spots” are not hidden. Just eight value chains account for over 50% of global emissions: food, construction, fashion, FMCG, electronics, automotive, professional services, and freight.

Each of these is undergoing or poised for major transformation, often beginning with the consumer, but requiring capital-intensive change upstream. The real opportunity lies in bridging that gap: orchestrating demand-led transitions that enable investment in heavy industry and infrastructure.

This might mean premium segments for low-emissions products, brand-driven sustainability standards, or new platforms for traceable supply chain finance.

In all cases, the strategic play is to channel value from end-users back through the chain, aligning commercial incentives with emissions reductions at scale.

Doing well by doing good

At first glance, the challenge of decarbonising the global economy can seem overwhelming. But with the right lens, it becomes a landscape of opportunity.

By identifying high-growth transition pathways, investing ahead of the curve, and building enduring competitive positions, businesses can generate financial value while accelerating progress toward climate goals.

In other words, we can make good money, both in quantity and in character.

That’s smart strategy. That’s smart policy. And that’s smart business.

illuminem Voices is a democratic space presenting the thoughts and opinions of leading Sustainability & Energy writers, their opinions do not necessarily represent those of illuminem.

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