Why Government support means now is the time for sustainability start ups
Looking ahead to the COP26 United Nations Climate Summit later this year, one of the primary aims for governments and businesses will be to harness the power of innovative sustainability startups to deliver on their goals. Thanks to their agility and high growth potential, SMEs with scalable solutions to climate change are uniquely positioned to attract significant investment. Governmental grants and funding are available to businesses capable of building back better for a climate resilient economy.
UK Government Budget 2021
The UK Government’s 2021 Budget is hot off the press. Amongst other announcements in an extremely unorthodox budget, the Chancellor set out a new £375 million UK-wide ‘Future Fund: Breakthrough’ to pick up where the 2020 Future Fund left off. It will invest in highly innovative companies such as those working in life sciences or clean tech, and which are aiming to raise at least £20 million of funding. The government is seeking to crowd in private capital by providing some initial funding to firms in those sectors that it sees as strategically important.
Equally important for UK Tech Companies, the government has set out to major reforms to boost entrepreneurship; firstly to the immigration system to help UK businesses attract international talent with new talent provisions, and secondly by looking to open up the London listing rules so that it is more founder friendly and to encourage London-based IPOs.
The UK Government has also announced that it will be consulting on new R&D grants and tax credits to further support innovation.
Consumer demand — how we buy and use things
In 2021, sustainable business ventures are ripe for opportunity. Younger generations now expect brand sustainability and transparency, and they seek out ethical, vegan, local and circular products. However, a key challenge remains for businesses, which is to penetrate beyond the “sustainable consumer” patterns to normalize zero carbon emissions and zero waste across the entire economy. According to Francis Laupa, founder of ClimateLaunchpad, you’ll need both an ethical mission and the ability to meet the demand of the entire market to achieve success as a sustainable entrepreneur in 2021.
Circular economy — how we dispose of things
Circular economy innovators can take advantage of the momentum from governmental action. A variety of approaches to phasing out single-use plastics have begun and in the UK it is now illegal to sell or stock single use straws, stirrers and cotton buds. The rise in PPE and food packaging waste during the pandemic proves that plastic waste remains a challenging burden.
The bans on single-use plastic not only sets the stage for new approaches to recycling, they signal significant interest in broader circular economy shifts. For instance, the EU is planning an eco-design law which would guarantee the right to repair electronics and phase out disposable packaging by 2030. Startups who focus on traceability, reverse logistics schemes and waste mining all have significant disruptive potential.
EV, transport and buildings — how we move, live and work
For startups in the EV space, major action is also underway to phase out the use of new internal combustion engines (ICE) starting with passenger vehicles in Europe, the UK and North America. Norway leads the pack with a 2025 target, while the UK has set 2030 as a target. These laws indicate a strong need for EV charging infrastructure, as well as R&D in alternative hydrogen and ammonia fuels to develop solutions to clean shipping and air transport.
Grants are available for a variety of areas from hydrogen fuel to energy efficiency in homes in the UK. The air industry in the UK signed a pledge to reduce carbon emissions by 70%. Devising the solutions to achieve that goal present considerable challenges. The UK’s Jet Zero Council has awarded a stage-two £500,000 sustainable aviation fuel (SAF) grant to the Altalto Project, a collaboration between British Airways and Velocys.
Residential property owners can also earn Green Deals for energy efficiency upgrades or support in becoming Green Homes Grant installers. Depending on your location, additional grants of up to £15,000 for sustainable business projects are available for SMEs. Preparing grant applications requires a strategic presentation of your project’s viability.
Tax credits and grants
Governments are also providing financial support for these developments through a variety of R&D tax credits. Businesses developing clean technologies can access R&D tax credits to get beyond the development and prototyping phases. However, preparing successful claims depends on navigating HMRC standards for determining eligibility. Startups should demonstrate how their business provides measurable improvements linked to key targets, such as achieving carbon neutrality by 2050, reducing water consumption by 50%, and reducing waste by 75%.
Meanwhile, Innovate UK are introducing an increasing number of grants to help sustainability start ups to fund opportunities that are of strategic, technical importance to the UK such as the recent £134m grant to help companies Build Back Better.
Please get in touch for help accessing these important funding opportunities with our professional help. We’ll guide you through the application process.
The stakes of climate change and its environmental risk have caught the attention of financial institutions, signalling a turning point for investors. What Mark Carney called the “tragedy of the horizon” of combined climate risk — extreme weather, sea level rise and stranded assets — has already become a reality. This is why the BOE is set to launch climate stress tests on UK banks and insurers to assess risk. In the US, Moody’s recently found that USD $8.7 trillion, 11% of its total rated global debt has climate risk exposure. As a result, it is placing increased importance on ESG issues in its credit ratings. Blackrock and Bloomberg have both made similar statements. Financial services providers increasingly prioritize businesses with sustainable products.
Businesses are also vying to get recognition for their sustainability efforts. Lists like Corporate Knights global 100 ranking, the RE100 for businesses supplying their operations with 100% renewables, the Ellen MacArthur Foundation’s CE100, and Climate Action 100+ are all spurring action.
Partnerships and Accelerators
It’s a great time for investors to tap into sustainable start ups, which is why a number of start-up accelerators is on the rise. TechNation’s Net Zero, Bethnal Green Venture’s Tech for Good and the Sustainable Accelerator are all great examples of UK based sustainability accelerators.
One of the ways that large corporates are filling the sustainability gap is by partnering with startups. Unilever recently announced its aim to build partnerships by creating its “Clean Future” programme, with 1bn euro in funding for start ups working to eliminate its carbon footprint and to boost the recycled content of its cleaning products by 2030. Amazon created a USD $2bn fund for climate solutions and Tesla launched a USD $100m carbon capture technology competition.
The level of collaborative effort among private businesses, investment groups and the government towards finding climate solutions is unprecedented. Scalable and measurable solutions are highly sought after by investors, while R&D credits can help start ups to develop their ideas.
Innovators have the upper hand in this situation because there is huge demand for viable climate change solutions. As momentum builds to transition the economy, it’s a pivotal moment to grow your SME or startup.
We help sustainability startups to build their businesses. If you are interested in finding out more please schedule a call today.
Originally published at https://www.attis.earth on March 4, 2021.