July 8, 2026

How Greentech financing pathways can help meet climate and biodiversity targets

In this blog, CUSP researcher Robyn Owen from Middlesex University and Meike Siefkes from the Norwegian University of Technology and Science reflect on a recent symposium and publication addressing how to improve Greentech financing. More specifically, aligned to the UK Willow Review and CUSP research, the focus is on creating the financing pathways that can enable Greentech disruptive innovation startups to scaleup and meet environmental challenges.

Blog by Robyn Owen and Meike Siefkes

Image: courtesy of Travel Photographer / pexels.com (licensed with Canva)

‘Leveraging Green Entrepreneurial Finance for Disruptive Innovation’ was the title of a recent symposium that put into focus the continuing problem of multi-trillion dollar under-investment to deliver the ‘green’, environmental transition targets required to meet global Net Zero carbon reduction by 2050 and 30 by 30 protection of 30% of the world’s land and water by 2030. Recent climate and biodiversity Conferences of the Parties (COP30 Action Agenda Outcomes Report, 2025) had previously emphasised the need for disruptive startup innovations to delivering the new technologies and business models to achieve environmental targets, but equally identified the insufficient flow of public and private investment into such innovations. Addressing this imbalance in practical terms is vitally important—if we wish to remain living securely, within the Planetary Boundaries.

The symposium in Kristiansand came together to explore the systemic barriers to financing small businesses that develop and commercialise disruptive green innovations, and examine potential solutions and examples of current good practice. Keynotes and panel discussions centred on coherent solutions that require orchestration and collaboration of the broader entrepreneurial finance (‘entfin’) ecosystem.

Barriers

The first major barrier we identified is the need for a clearer definition of green disruptive innovation. In this symposium, we referred to the creation and commercialisation of new technological platforms, that give rise to new forms of business models, with the potential to deliver radical and breakthrough industry activities. Green examples include the transition to renewable energies and synthetic biologically engineered materials that reduce carbon dependency and greenhouse gas capture and management systems, which combined with information technology efficiencies, can measurably improve Earth’s environment. Such disruptive market opportunities are by definition new, unknown, untested and face uncertain regulatory conditions and market acceptance rates.

Another big systemic barrier is the information asymmetry between founders and investors, which is greatest at startup when new ventures have no trading track record, leading to founders requiring early-stage equity risk finance for their potential high growth ventures as opposed to bank loans. For green innovators, this problem is compounded by additional factors: A high proportion of green innovation involves patient capital for hardware research and development requiring large amounts of capital to build demonstrators. The ensuing long ‘Valley of Death’ development periods before commercialisation therefore present deep pocket requirements and high risk, where only a few specialist private investors can afford to wait for the potentially high return rewards. Additionally, to avoid ‘greenwashing’, green innovators need to demonstrate their ‘Double Materiality’ by evidencing their environmental and social impact, as well as their economic value.

It has been shown that startups can succeed in commercialising their green disruptive innovation and thereby overcome the longer Valley of Death, despite the additional challenges. However, few of Europe’s innovative new ventures manage to traverse the ‘Valley of Insignificance’ and scale into fast growth larger businesses—why that is the case is an important question facing Europe’s investors and policymakers.

The public and private investment debate

Whilst free marketeers may argue that the problem of long horizon green innovation investment is no different from other (non-green) radical breakthrough innovations and will attract private market investment if and when demand aligns over time, this overlooks key public good market misalignment failures: it is abundantly clear that unchecked market forces which prioritise profit over public good continue to deny the full existential threats of climate change and biodiversity extinction, in the same way in which they continually undermine public health.

The question then shifts to how public policy, as envisaged by the Network for Greening the Financial System’s central bankers’ biosphere supervision, can act to leverage more private finance into green innovations and address the structural issues holding back long horizon hardware breakthrough technologies in order to support the commercial adoption of disruptive green innovation.

Finance escalator pathways for green innovation finance

Entfin ecosystem building offers a more holistic solution than the current patchwork of green innovation finance operating in many European countries. The UK is a prime example where public green innovation investment programmes operated by different agencies such as Innovate UK’s Launchpads, British Business Bank’s Low Carbon Innovation Fund, Department for Energy Security and Net Zero’s Clean Growth Fund and the Department for the Environment, Farming and Rural Affairs’ UK Nature Impact Fund lack connectivity and appear to operate in isolation.

Yet, the UK also has two programmes which offer more cohesive breakthrough sector support. At the start of the finance escalator, the UKRI Innovation and Knowledge Centres programme enables university centres of excellence to spinout and support early-stage ventures in green technologies in emerging breakthrough sectors such as renewable energy, engineering biology and construction sensors. These centres provide state of the art lab testing facilities and technical assistance with launchpad and accelerator commercial training, offering grant finance support and corporate industry connections. Critically, they provide national and international sector connectivity and leadership, positioning their green innovative founders into potential commercial markets and private investment.

At the next stage of the finance escalator, IUK’s 9 sector Catapult network offers 65 regional specialist support centres, set out to focus on venture building activities that bring together later stage Technology Readiness Level ventures to combine and compete to solve industry innovation requirements. There is growing evidence to suggest that industry facing Ven t ure Builders address important market failures where ventures fail to scale because they operate in silos that lack the networks and technical connectivity to adequately align with industry requirements.

Developing the entfin ecosystem of venture assistance, networking and investor connections has long been advocated for, but there is also the need to align founder and investor logics. A key argument promoted by the Middlesex University Nature Positive Accelerator programme is to improve green innovation founder presentations of their venture’s environmental impact. Undoubtedly, to improve public and private green impact investor screening of environmental ventures, investment into improved technical Monitoring, Reporting and Verification (MRV) systems to measure and benchmark environmental impact is required in order to avoid carbon tunnel vision and offer more holistic appraisal of the net environmental impact of venture projects.

Moving the dial on scaleup investment volume—international good practice

A general consensus during the symposium and in recent research is that governments should allocate more public funding into green innovation to support public good and overcome private market failures, particularly to support longer horizon disruptive Greentech innovation. International good practice evidence suggests that private investor incentives work well, especially combinations of tax breaks and blended finance where non-dilutive technical grants or government equity investment co-invest to encourage earlier stage private investment—combining public good, green venture environmental, and commercially driven private investor logics—that share the risks and broaden the base of early-stage green investment. Earlier formal private investment can also help to align ventures with later scaleup market investors, including attracting international investment to facilitate international market access. This latter point is important, as even amongst Europe’s largest equity markets the number of specialist private Greentech venture capital investors with deep pockets for scaleups remains small and insufficient to meet deeptech hardware investment requirements.

Different international markets are offering differentiated specialist solutions to the disruptive deeptech investment solution. France’s ‘Greentech 20’ programme picks winners and backs a small number of companies to grow, but has also required the France 2030 industrial initiative to ensure that deeptech hardware is sufficiently funded. Japan and South Korea also have well established equity investment markets which specialise in deeptech green disruptive sectors, including energy, climate, biotech and high-tech semiconductor sectors and are driven by early-stage corporate investment linkages, which has shielded their VC markets from recent external economic turbulence. In both cases they are also developing international investor linkages, such as South Korea’s VC partnership deal with Israel.

In the UK, which has around £2.5 trillion of pension funds invested, Pensions for Purpose has made some headway in lobbying for increased pension fund climate and biodiversity investment. However, despite being raised during the UK’s Patient Capital Reviewalmost a decade ago, not enough has been achieved in ‘shifting the dial’ of institutional investment into earlier scaleup, where it is required. Whilst the establishment of a UK £28bn National Wealth Fund in 2025 promises to scale-up project finance, it remains to be seen as to how much of this will facilitate green disruptive scaleup ventures. On a far more impressive scale, Japan’s Government Pension Investment Fund, the world’s largest (£1.8T), has recently prioritised environmental impact investment, including into startups and scaleups.

On an optimistic note, it appears that despite poor global economic headwinds, governments around the World are taking the lead in delivering the substantial public funding required to leverage sufficient private investment into the Greentech disruptive innovation that can enable reaching climate and biodiversity targets.