HSBC partners Google to hit US$1 billion climate tech finance goal

BRITAIN’S greatest financial institution HSBC has partnered with Google to finance fast-growing local weather know-how corporations behind a number of the world’s most promising options to international local weather change, executives from each corporations informed Reuters.

Under phrases of the partnership, HSBC will look to supply financing to corporations cherry-picked by the US know-how large to hitch its Google Cloud Ready-Sustainability programme.

Members of the programme endure a validation course of, with Google assessing the standard and efficacy of the know-how in improvement in addition to its traction amongst prospects.

“What we’re seeing is companies wanting to accelerate delivery of their sustainability goals. But there’s a degree of confusion as to which solutions out there are going to help solve their problems,” stated Justin Keeble, managing director for international sustainability at Google Cloud.

“HSBC’s finance will help those partners scale their businesses, and then HSBC will help customers access all this innovation.”

Martin Richards, international head of local weather tech and sustainable finance at HSBC, stated Google’s due diligence offered “a certain comfort” that complemented the financial institution’s personal evaluation of potential new enterprise debt offers – the place a lender supplies debt financing for inherently riskier corporations.

Scaling applied sciences that may assist the company world transfer extra rapidly to a low-carbon economic system dominated the COP28 local weather talks in Dubai in December, and is an important a part of most banks’ efforts to drive a worldwide push to chop emissions.

But finance to the sector fell sharply in 2023, PwC information confirmed, as traders and lenders fretted about danger.

“We feel like we are increasing our odds of success by working with partners like Google. We recognise we’re taking credit risks, but that is all part of banking,” Richards stated.

The tie-up with Google’s cloud computing arm comes a 12 months after HSBC purchased the UK unit of failed tech lender Silicon Valley Bank (SVB), a deal brokered by the UK authorities in an try and avert contagion within the startup world.

The availability and affect of enterprise debt stays a key concern for policymakers. SVB was a big participant within the area however extra mainstream lenders have tended to eschew the market, citing dangers to capital.

Research from the International Energy Agency suggests virtually half the emissions reductions wanted to hit web zero by 2050 will depend on at the moment unscaled know-how.

Just six months after buying SVB UK, HSBC stated it might intention to supply US$1 billion in funding to local weather tech corporations throughout a spread of sectors, together with electrical autos, battery storage and sustainable meals programs by 2030.

Richards stated HSBC was “well ahead” of inside targets on that aim, and was hopeful the partnership and the launch of HSBC Innovation Banking would speed up progress in direction of a extra bold goal of transitioning 1.3 million purchasers to web zero by 2050.

The 30 corporations within the initiative present cloud-based tech options designed to assist prospects scale back their carbon emissions by processing information on their sustainability dangers.

“If you’re an airline, and you need to get to net zero using sustainable aviation fuels, you’re going to need to know the players who will come to market quickest and meet their production goals fastest,” Richards stated.

Over time, HSBC will facilitate introductions between present prospects and local weather tech corporations to help transition, he added.

Alongside information of the tie-up with Google, HSBC stated it had additionally inked the partnership’s first enterprise debt take care of a startup referred to as LevelTen Energy, which runs a market for patrons and sellers of renewable power.

The lending phrases weren’t disclosed.

“Technology and finance are going to be key enablers of climate action. HSBC were very drawn to our belief that essentially, the sustainability challenge is really a data challenge,” Google’s Keeble stated.

“And increasingly, our mutual customers are having to manage vast amounts of data and uncover useful insight from that to take action.” REUTERS