Why green tech is key to the net zero transition

With an increased mandate to invest in early-stage companies whose green technology could help tackle challenges around climate change, Barclays’ Sustainable Impact Capital portfolio represents investment with a difference – as Steven Poulter, Head of Principal Structuring and Investments, explains.

“There’s a fundamental belief within Barclays that innovation is needed to deliver a viable transition to net zero – and that early-stage green tech companies will be a key enabler of these advancements,” says Steven Poulter, Head of Principal Structuring and Investments at Barclays.

This belief explains why the organisation’s Sustainable Impact Capital (SIC) portfolio has grown in stature since its original investment mandate of £175m in early 2020.

Through equity investments, SIC is backing early-stage green tech companies that are delivering environmental solutions that will help the organisation, as well as its clients and communities, transition to net zero. By the end of June 2023, £112m had already been invested in 18 companies. Now, the mandate has been increased to £500m by the end of 2027.

“It has been so exciting to see Barclays coalescing behind sustainable finance as an opportunity,” says Poulter. “The increase in talent, energy and execution in the space has been terrific to witness and be part of.”

Optimising the benefits of the Barclays ecosystem

However, there is much more to SIC than initially meets the eye. “In particular, we’re looking for companies that operate in a sector where there’s a connection with Barclays and our ecosystem, because we want to help scale these companies as rapidly as possible and help our existing clients to decarbonise,” Poulter explains.

“We are also able to add additional value to the companies we invest in – beyond a traditional venture capital route – whereby we lean in, offer support and really drive connections. That could be making introductions to clients or giving our founders a platform to speak on expert panels.”

This additional value is made possible by the wealth of resources and opportunities that Barclays has to offer, Poulter says. Among these is the organisation’s Unreasonable Impact partnership – which aims to provide entrepreneurs with the tools they need to address pressing social and environmental challenges – and workspaces such as Eagle Labs and Rise London, Barclays’ home of fintech in the UK.

“We can also help on the financing side throughout the scale-up journey – all the way from early banking services and balance sheet financing to more sophisticated products as the companies grow,” he adds. The Corporate and Investment Bank’s expanding Sustainable and Impact Investment Banking (SIB) team is helping to drive this support. Focused on advising and raising capital for companies solving environmental and social issues, SIB is backing Barclays’ goal to facilitate US$1tn of sustainable and green financing by 2030.

Investing in a greener future

In order to focus SIC’s momentum most effectively, the team is clear-sighted about the industries it should support. “We’re investing in sectors like power and energy, agriculture, transport and logistics, and the built environment – and we’ve made three hydrogen investments because we believe this area is really important,” says Poulter.

There’s also another key area of interest for the portfolio: carbon dioxide removal. “It’s almost a new sector in its own right,” he admits. “Sadly, the science suggests that decarbonising is not enough, so we’ll have to find ways to extract, filter and trap carbon dioxide from the air.”

This is no simple feat, so Poulter says entering this “challenging, really complex and very innovative” area in the future will require careful thought. “At the moment, we’re spending time with experts and innovators and looking to invest in technology that’s underpinned by robust science.”

In the meantime, he has already been particularly impressed by two recent investments, saying: “It’s really exciting to see these kinds of collaborations coming to life.”

Among these is the indoor vertical farming company 80 Acres Farms, which found its footing firmly in the Barclays ecosystem. “Initially, the company was part of the Unreasonable Impact programme,” he recalls. “We invested, and then Barclays Investment Bank started to work with the team and actually acted as the sole placement agent during the second round of fundraising. 80 Acres Farms has grown rapidly.”

The decarbonising organisation SaveMoneyCutCarbon, another Unreasonable Impact venture, has also been on Poulter’s radar. “Having seen its potential, Barclays entered into a collaboration to help our corporate banking clients start their decarbonisation journey – with the company’s support in finding ways to make their operations more sustainable.”

With a keen eye on the existing and growing portfolio, Poulter says the priority going forward is to continue delivering as a ‘value-add’ investor. “We’ll achieve this by really leveraging Barclays’ growing green tech ecosystem, collaborating with our colleagues from across the portfolio and taking full advantage of the platforms we have access to – which will all ultimately help our companies achieve their climate impact ambitions.”

Reflecting on SIC’s success so far, Poulter is quick to commend the team around him. “The founders constantly inspire with their drive and ambition, and the Principal Investments team that we have built within Barclays Treasury is a privilege to be part of,” he says.

“It’s inspiring every day to work in such an exciting and impactful area. The dynamism is infectious, and it’s a joy that even at this stage in my career, I am energised and learning daily.”

Need to know: Sustainable Impact Capital 

Barclays’ Sustainable Impact Capital portfolio aims to seek out and support clear, scalable propositions that deliver both environmental benefits and economic returns. The portfolio is led by Barclays’ Principal Investment team, who have a mandate to invest £500m by 2027 in the equity of environmentally focused early-stage technology companies which target the goals and timelines of the Paris Agreement.