HSBC, the global financial institution, has announced a $1 billion commitment to finance climate technologies, with a particular focus on carbon dioxide removal. This funding will support startups in the clean technology sector, helping them to grow and scale their solutions. HSBC’s investment aligns with its pledge to achieve net zero emissions in its financed portfolio by 2050.
The $1 billion funding will be directed towards startups working on a range of climate tech solutions, including electric vehicle charging, battery storage, sustainable food and agriculture, and carbon removal technologies. This investment follows two previous programs by HSBC aimed at advancing the cleantech space: HSBC Innovation Banking and HSBC Asset Management’s Climate Tech Venture Capital. The latter program provides financial support to tech startups addressing climate change in sectors such as energy, transportation, and agriculture. HSBC also invested $100 million in Bill Gates’ Breakthrough Energy Catalyst Fund last year, which supports green projects worldwide.
Barry O’Byrne, HSBC’s Global Commercial Banking CEO, emphasized the importance of access to finance for early-stage climate tech companies, stating, “With HSBC’s global reach and in-house climate tech expertise, we can offer these pioneer companies unrivaled support.”
According to a study cited by HSBC, venture capital funding for climate startups declined by 40% in the first half of 2023. However, when considering the bigger picture, it becomes clear that the climate tech industry has experienced significant growth in recent years. Since 2020, around 2,500 climate tech companies have raised a total of $117 billion in venture funding. While the quarterly growth rate has slowed, this does not indicate a retreat but rather a relative slowdown in overall industry growth. In fact, climate tech VC funding reached over $70 billion in 2022, according to HolonIQ.
Venture capital investors play a crucial role in helping startups develop, commercialize, and scale up their technologies. Supportive policies, such as the EU Green Deal Industrial Plan and the U.S. Inflation Reduction Act, have contributed to early-stage investments in the climate tech sector. Key strategic investors, including Microsoft, Aramco Ventures, and SK, have been actively participating in late-stage and growth funding rounds. These investors are essential for climate tech startups, as the International Energy Agency estimates that approximately 50% of the carbon reductions needed to reach net zero emissions by 2050 depend on the rapid development of their technologies at scale.
HSBC’s climate tech VC initiative aims to accelerate the adoption of crucial technologies in the fight against climate change. The bank has allocated $100 million to support four major technologies: Direct Air Capture (DAC), clean hydrogen, long-term energy storage, and sustainable aviation fuel. In addition to this, HSBC has joined the World Bank’s Private Sector Investment Lab, which focuses on increasing financing for renewable energy and infrastructure projects. The bank has also supported the development of a global carbon market in Hong Kong and declared that it will not support projects involving the development of new oil and gas fields.
HSBC’s commitment to tackling climate change is demonstrated through its financial support for climate tech startups. By supporting early-stage businesses and project financing, the bank contributes to the development of innovative and clean tech solutions, such as carbon removal. HSBC aims to achieve net zero emissions in its operations and supply chain by 2030 and in its financing portfolio by 2050. The $1 billion pledge in climate tech startup funding will play a crucial role in achieving these climate targets.