Sustainable investing: on becoming the new normal

It looks like we are on the brink of a notable acceleration in the speed of innovation around tech, driving the UK’s net-zero goal in the right direction, as sustainable and climate investing rises to mainstream.

The UK was the first major economy to place a legally binding responsibility to achieving Net Zero by 2050, but despite this, it is widely acknowledged that the process of decarbonisation needs to pick up speed throughout the UK.

PwC suggests in a recent report that £40 billion investment per year needs to be pumped into new low carbon and digital infrastructure over the next decade.

The report further outlines that half of the new technologies needed to work towards net zero are not equipped with the sufficient investment structures or sophisticated business models needed to attract low-cost capital.

Though a few years ago, the conversation about sustainable investing barely prevailed, we are now seeing a huge and rapid shift in interest and capital into the sustainable investing space.

According to Beauhurst, since 2021, the total value of fundraising for cleantech businesses was £1.67 billion, spanning across 426 raises and with the current fundraising total or 2022 already reaching a staggering £2.74 billion.

This influx in investment is a result of a multitude of influences, most notably the government’s commitment to net zero in the form of government subsidies and regulation.

Corporate initiatives, such as the climate pledge signed by major players in the realm of Amazon, Microsoft, Coca-Cola, Pepsi and Unilever, furnish an important chance for the idea of net zero to move to the forefront of investment and for sustainability to turn into a very mainstream concept for founders and investors.

Boston Consulting Group suggested in a recent report that technologies which already exist have the ability to reduce 65% of emissions required to fulfill the net-zero goal, however just 40% of these existing technologies are still at the early adoption stage, with a 35% technology gap persisting.

Clearly, the government has an important role in pushing innovation for net-zero tech forward, but when highly influential companies like Amazon and Microsoft take on climate pledges, this brings the matter into a highly relevant domain of issues – one that also prompts consumers, who might not have otherwise thought about an organisation’s sustainability moves, to do exactly that.

Contrarily, it can be argued that the climate initiatives set out by organisations are driven by consumers who are taking an interest in seeing that kind of data.

Younger generations are also getting involved in this shift as they have a higher expectation that an organisation takes proper and genuine initiative with their climate and sustainability efforts.

Many within the UK Business Angels Association, have recognised this year and the next as years which will see a significant change of pace for innovation of net-zero tech, as the matter of sustainability and climate investing treks in the right direction as it grows to become mainstream.

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