Investors are increasingly placing their bets with renewable energy and abandoning oil and gas, the Institute for Energy Economics and Financial Analysis reports, in an analysis that shows capital markets “shifting decisively towards cleaner investments”.

While the American Petroleum Institute maps out a possible future in which fossils revive their own fortunes by embracing a “new energy boom,” IEEFA oil and gas industry analyst Trey Cowan says the financial community may already be past that point. “Most signs suggest a long-term capital flight away from fossil fuel firms and toward companies that have fully embraced the energy transition,” he writes.

Cowan illustrates the point with a comparison of two exchange-traded funds (ETFs) in the United States—iShares Global Clean Energy (stock code: ICLN), a bucket of 30 renewable energy stocks whose combined value has nearly quadrupled in the last four years, and iShares Global Energy ETF (IXC), an oil and gas-focused fund whose 59 companies fell 17% over the same time span.

“The companies in ICLN are mostly small, averaging just US$206 million in market capitalization, while the IXC constituents average $17.3 billion in market cap,” Cowan writes. “Smaller companies also tend to be riskier and more volatile. But even though its constituents are small, ICLN enjoyed $3.5 billion in capital inflows over the past year, dwarfing the relatively paltry $435 million that trickled into IXC.”

That contrast “may illustrate just how dramatically clean energy captures the imaginations of investors looking at long-term trends,” he adds, as does the relative performance of the “energy sector”—which is curiously defined to exclude renewables—within the wider stock market. In 2010, “energy” was the third-largest of the 11 sectors in the S&P 500, accounting for 12.27% of the index. At the end of last year, it placed dead last, at just 2.28%.

“As the capital exodus from fossil fuels has accelerated, socially responsible investment strategies have blossomed,” Cowan says. “Funds with environmental, social, and governance criteria now comprise one-third of the $51.4 trillion of assets under management in the U.S., according to the Forum for Sustainable and Responsible Investment.”

And while U.S. fossils are taking “tentative steps” toward cleaner operations, he cites a Federal Reserve Bank of Dallas survey that tracked a difference between larger and smaller companies: while 83% of larger producers are laying plans to cut emissions, reduce natural gas flaring, or recycle water, only 46% of companies with output below 10,000 barrels per day are taking similar steps.

Cowan says a trend toward industry consolidation, with larger companies buying out smaller ones, may slow the momentum toward somewhat less environmentally destructive practices. But even among the world’s biggest fossils, there’s still a great deal of room for improvement, Canada’s Pembina Institute noted late last year.