Climate tech startups are getting a major boost with HSBC‘s recent announcement of a $1 billion funding allocation. This financial injection aims to particularly empower early-stage businesses to develop various pioneering solutions. These include electric vehicle (EV) charging infrastructure, advanced battery storage solutions, carbon removal innovations, and sustainable agriculture and food technologies.
This initiative is in response to recent figures highlighting a 40 percent decrease in venture capital funding for climate-focused startups. The period covers the first half of 2023. This decline is due to market conditions adversely affecting the valuations of nascent tech enterprises.
A global effort
In past years, the majority of global investments in climate tech startups were concentrated in the United States and Europe. However, HSBC’s $1 bn allocation intends to support high-potential companies irrespective of their geographic location.
“Access to finance is critical for early-stage climate tech companies to create and scale real-world solutions. We are already working with some of the most exciting companies at the forefront of climate tech, from seed to global scale-up,” revealed Barry O’Byrne, chief executive officer of HSBC’s Global Commercial Banking.
As emphasized by the bank, nearly half of the emissions reductions needed to attain the 2050 net-zero emissions target will hinge on technologies currently in the demonstration or prototype phase.
Read: World leaders urged: Triple renewable energy by 2030
More green financing endeavors
In the Middle East, particularly in the United Arab Emirates (UAE), more banking and finance sector players are doing their part to support green projects. This heightened effort comes ahead of the country’s hosting of COP28. It also coincides with the UAE’s “Year of Sustainability.”
For instance, First Abu Dhabi Bank (FAB) recently signed a Memorandum of Understanding (MoU) with Blue Carbon. Blue Carbon is an environmental asset developer engaged in operations across Africa and Asia. This collaboration aims to advance carbon emission-reducing projects.
FAB has previously announced that they are committing $75 bn to sustainable finance projects by 2030. They have already dedicated an initial allocation of $14.2 bn to environmentally and socially responsible solutions.
Highlighting the pivotal role of cutting-edge technologies in combating climate change and supporting green financing, the Central Bank of the UAE also launched a new global initiative. The program is called COP28 UAE TechSprint. Unveiled earlier this month, it is in collaboration with the Bank for International Settlements, the Emirates Institute of Finance, and the COP28 Presidency.
This global effort will utilize advanced technologies such as artificial intelligence, blockchain, the Internet of Things, and sensor technologies to tackle key areas. These include enhancing sustainable finance reporting, improving transparency and auditing, and making risk assessments more efficient and accurate.
Saudi Arabia likewise announced it would contribute $2.5 billion to a green initiative in the Middle East over the next decade. Launched last year, the initiative is aimed at reducing carbon emissions in the region by funding clean energy projects.
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