Green tech sectors need more capital
Start-up firms in the green technology industry are missing out on capital and need a new funding model, a senior JP Morgan banker said at a Reuters event in London on Monday.
Chuka Umunna, JP Morgan’s head of EMEA ESG and green economy investment banking, told the Reuters Energy Transition Europe 2023 event that most of the capital raised in green technology was flowing to sectors such as electric vehicles and low-carbon energy, while others such as sustainable food ecosystems that “in some cases make more of a contribution to global greenhouse emissions” were not seeing the same amount.
“We need to build a funding model for green tech companies,” Umunna said, adding that this was partly because of the capital requirements for some green tech firms in early stages of development.
Geopolitical and economic challenges
Umunna said that green tech investment had not been immune to geopolitical ructions “spooking the market”, as well as worries about a weak economy, particularly in Europe and in public markets.
He said that deal activity was increasing in private markets, where JP Morgan had seen a “huge amount of interest” from institutional investors, family offices and sovereign wealth funds.
He also said that a shift to a greener, lower-carbon economy offered up a huge opportunity for banks such as JP Morgan, which had committed to aligning its financing activities with the goals of the Paris Agreement and to facilitating $200 billion of transactions that support climate action and sustainable development by 2025.
Bureaucracy and regulation
Umunna also said that investment into green tech was being stymied by bureaucracy, including delays to permitting for the infrastructure needed for renewable energy and other projects.
He said that the UK government needed to provide more clarity and certainty on its regulatory framework and incentives for green tech, especially in the run-up to the COP26 climate summit in Glasgow next year.
He also called for more collaboration and coordination between the public and private sectors, as well as between different countries and regions, to accelerate the transition to a green economy.
He said that the banking sector could play a key role in enabling and facilitating the transition, but it could not deliver it on its own.
“Our job is to enable and facilitate … the transition. We are not in a position to deliver the transition,” he said, pointing to key areas for decarbonising over which banks had no control, such as reform of energy systems and consumer behaviour.
