Climate change is the single biggest issue facing our planet. It is not a threat that can be tackled alone – drastically reducing carbon emissions and working towards a net zero future will require start-ups, big corporations, NGOs and governments to work together. To deliver impact, this joint endeavour needs to encompass new technologies, revolutionise our approach to data, and build a culture rooted in sustainability.
Climate action was a focal point of discussions at the recent G7 Summit in Cornwall – where world leaders renewed a pledge to raise $100bn a year to help poor countries cut emissions – and will continue to dominate the national conversation as attention turns to the COP26 Summit, the UN climate change conference taking place in Glasgow in November.
In the ongoing challenge for institutions to reduce their environmental impact, technology obviously has a crucial role to play. The good news is that much of the tech we need to combat climate change already exists – we just need to get better at using it.
However, in my view, true change is only possible if we effectively combine the innovation at hand with growth capital. That’s why last week Global Tech Advocates held an event bringing together forward-thinking investors including Future Energy Ventures, Lakestar and Draper Esprit with innovative tech leaders to discuss the best routes to get to net zero. The UK is now a global centre of impact investing and is home to vast pools of private and public capital committed to funding the green revolution. Investment in responsible funds reached around £1bn a month on average in 2020 according to the Investment Association.
The UK is now a global centre of impact investing and is home to vast pools of private and public capital committed to funding the green revolution.
Furthermore, research from data platform Beauhurst found that £787m was invested in cleantech companies in the UK in 2020. While this a slight decrease from the total cleantech investment figure in 2019, it still represents a £250m increase on 2018, and further illustrates the ongoing demand for green tech among VCs despite the impact of the pandemic.
In the lead up to COP26, the UK needs to assess how this groundswell in funding can drive the country toward its net zero 2050 targets and unlock wider benefits across the economy. The influx of capital is clearly having an impact on the UK’s green start-up environment. We now need to assess progress to date along with identifying the hurdles ahead.
To do this, the green tech ecosystem needs assistance from a variety of leaders. We need the government to support businesses committed to tackling the biggest problems facing us as a planet – this could include support for R&D funding and tax credits for climatetech and cleantech as well as the continuation of EIS and SEIS to encourage early-stage investment.
Businesses and investors also have a key role to play, especially in driving ESG (environment, social, governance) agendas within their own organisations. It was great to see the launch last week of ESG_VC, a fund led by Beringea and BVCA (British Venture Capital Association) with investment principles fully focused on sustainable investing.
UK greentech investment: the importance of data
The other key topic discussed during the Global Tech Advocates event was the importance of data and measurement. Many start-ups and scale-ups acknowledge that they must do much more to measure and track impact with reliable data, especially in terms of understanding how to address sustainability and economic benefits.
The focus on data can assist in creating a common language for business sustainability, and from this establish the capability to set clear targets, implement plans and measure progress. Technology that drives sustainability through measurement and observation is a critical sector for the UK economy and one we must accelerate.
The technology industry must hold itself up to the mirror, too. Think about the energy required for the multitude of cloud servers which host terabytes of data. These demands are increasing exponentially so tech start-ups and scale-ups (and the Big Tech companies) need to focus on their carbon footprints more than ever before. The aforementioned ESG_VC does demonstrate that the industry is prioritising investment in start-ups and scale-ups which address the net zero focus from their inception, which is a positive step.
Through access to growth capital, better data and a focus on measurement, we can truly begin to unlock new, carbon-free means of living and working. If we then harness new technologies correctly and incentivise a culture around their adoption, we can realise a net zero future. But we must move quickly. The planet is giving us numerous examples that time is almost up so it is crucial that we combine new insight with urgent action to prevent a worsening climate crisis.