HSBC and Google Unite for $1B Climate Tech Push

In a groundbreaking collaboration, HSBC, Britain's largest bank, has partnered with Google to spearhead financing for emerging climate technology companies. These firms are at the forefront of developing promising solutions to combat global climate change, executives from both companies disclosed to Reuters.

Through this partnership, HSBC aims to provide financial support to select companies that Google has identified as part of its Google Cloud Ready-Sustainability program. This initiative involves a rigorous validation process where Google evaluates the potential and effectiveness of the technologies being developed, as well as their market traction.

Martin Richards, HSBC's global head of climate tech and sustainable finance, highlighted the value of Google's thorough due diligence process, providing "a certain comfort" that enhances the bank's own assessment strategies for potential 'venture debt deals.' These deals are crucial for supporting inherently riskier companies in the climate technology sector.

This collaboration arrives at a crucial time when the need to transition to a low-carbon economy is paramount, underscored by discussions at the COP28 climate talks in Dubai. However, financial investment in the sector experienced a downturn in 2023, as highlighted by PwC data, due to growing concerns over risks among investors and lenders.

Richards remains optimistic about the partnership, stating, "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."

This alliance with Google Cloud marks a significant step for HSBC, especially following its acquisition of the UK unit of Silicon Valley Bank (SVB), a move orchestrated by the UK government to prevent wider market instability. Venture debt, a critical financing tool for the sector, continues to be a focus area for policymakers, particularly after the collapse of SVB, a key player in the field.

HSBC has committed to providing $1 billion in funding to climate tech companies by 2030, aiming to support advancements in electric vehicles, battery storage, and sustainable food systems. The bank reports it is already surpassing its internal targets, with Richards expressing hope that the partnership and the launch of HSBC Innovation Banking will expedite progress towards their ambitious goal of transitioning 1.3 million clients to net zero by 2050.

The collaboration has already resulted in its first venture debt deal with LevelTen Energy, a startup that operates a marketplace for renewable energy transactions, showcasing HSBC and Google's commitment to harnessing technology and finance in driving climate action. 

Keeble emphasized the role of data management in addressing sustainability challenges, suggesting that the partnership is poised to make significant strides in enabling climate solutions through technological and financial innovation.