We're delighted to welcome HSBC Innovation Banking to the Cleantech for UK Coalition. As part of one of the world's leading banking and financial services organisations, HSBC Innovation Banking brings invaluable expertise and global connectivity, alongside a deep commitment to supporting the cleantech sector's growth.
To mark this exciting partnership, we sat down with Tim Lord, who heads up the Climate and Energy team for HSBC UK. With a background in government, including leading the UK decarbonisation strategy from 2017-2020, Tim brings a unique perspective that bridges policy, finance, and innovation. In this conversation, he shares insights on the HSBC Groups long-term net zero ambitions, the barriers facing clean technology founders, the innovations that excite him most, and what he'd prioritise if given 10 minutes with the Cabinet.
HSBC has been going for 160 years by embedding ourselves in growth sectors, and we see clean tech as a huge opportunity both globally and in the UK.
"There are four key reasons. First, as a group, HSBC has an ambition to become a net zero bank by 2050, and supporting our customers in their transition is core to our strategy. It's important to them and to us in terms of managing our own resilience.
Second, clean tech is absolutely critical to decarbonising economies globally. Innovation has already driven huge cost reductions, meaning you can avoid the trade-off between environmental outcomes and economic outcomes, the right thing for net zero is often the right thing for the bottom line.
Third, this is about growth. HSBC has been going for 160 years by embedding ourselves in growth sectors, and we see clean tech as a huge opportunity both globally and in the UK.
Fourth, it's about our own capability. We have significant innovation economy capability through HSBC Innovation Banking, and we bring international connectivity through our global HSBC platform. Climate change is a global problem, and we can really play into those supply chains and help companies grow.
We know that, as of today the HSBC Group finances a number of industries that significantly contribute to greenhouse gas emissions. Over the last few years, we have refined our strategy to help our customers reduce their emissions and to reduce our own."
"We see clean tech investment as a really big opportunity. When clients come to us, whether to the Innovation Bank, HSBC UK, or our global team, we make sure they're working with the part of the bank best suited to their stage in the growth journey. Earlier stage companies often work with HSBC Innovation Banking, where we support founders and investors with banking and lending solutions for all company life stages. As they grow, particularly internationally and in scale, they might work with different parts of the bank.
Climate tech and energy tech companies are often more capital intensive than innovators in other parts of the economy, so we make sure we have the right products and services—the right longevity of lending, to help these companies grow and meet their full potential."
Companies working in energy and climate tech need time and investment to make significant revenue, and they need their funding providers [...] to really stand with them through a long process.
"There are several key barriers. First, there's a need for clear direction of strategy and policy. These sectors are often policy-driven initially. It can be challenging for founders or growth companies to get the capital they need if the policy frameworks which matter to their business aren’t well-defined. Related to this, how markets are designed and set up is really important, markets need to be designed in ways that encourage and enable innovation to achieve its full potential.
Second, the capital intensity of a lot of this innovation can be a real challenge. Many companies working in energy and climate tech need time and investment to make significant revenue, and they need their funding providers, whether on the VC side or debt side, to really stand with them through a long process.
The third key barrier is around skills, particularly for companies growing quickly. Getting the right people with the right skill sets to enable growth, both on the management side and in areas like engineering, is always a challenge for growing sectors.
The UK is a really good place to do business as a climate innovator because you do have more policy clarity that is enabling these companies to grow. This is shown in the strength of our climate tech ecosystem in the UK, being one of the biggest in Europe and within the top 5 in the world, and with the depth of talent and expertise in key climate segments such as Energy and Carbon Management."
"That’s like picking your favourite child! One of the most exciting things about innovation in this space is there are so many elements of it. We need to decarbonize electricity and enable supply, distribution and demand to work together effectively. And we need to transform other sectors – whether the built environment, agriculture, heavy industry, transportation, waste management, or carbon removal. Every sector of the economy is going to be impacted in a much more material way over the next five or ten years.
Having said that, in the UK, I would highlight the energy sector as critically important and a huge opportunity. The economics already mean that low carbon generation is often cheaper than the fossil fuel alternative, but how you integrate that into the electricity system, how you make sure the demand side can bring value in terms of providing flexibility, and how you align low cost energy with energy security, are all critically important.
The other area I would highlight is carbon management, where carbon capture and storage and carbon dioxide removal is hugely important to meeting UK net zero targets. It's often underestimated because there are other things we need to do quickly, but we have to build our capability here if we're to keep temperature rises close to the level that we all collectively aspire to. We're doing work in that space with some of the UK clusters, and we're really excited by the innovation that can drive costs down."
"Overall, I think the UK is a pretty good place to do this. We are moving in the right direction in areas such as deployment of grid infrastructure, which is going to be absolutely fundamental to a lot of the business models in this space.
There are some areas where government support can help. The British Business Bank’s largest ticket size is about £10 million while the National Wealth Fund has a minimum ticket size of around £25 million, so there's a missing middle funding gap for scale-ups. I know we're hopeful that we're starting to see some movement around that.
(It's been) positive over the last year or two, but the more clarity we have around what we're trying to achieve as a country [...] the better in terms of enabling people to invest with confidence.
The other thing is making sure we stay the course in terms of policy. That's been much more positive over the last year or two, but the more clarity we have around what we're trying to achieve as a country from our energy system and from decarbonization of other sectors, the better in terms of enabling people to invest with confidence.
The last point is about where we're reforming electricity markets and taking decisions around how markets operate and are regulated. We need to make sure we're doing that in a way that encourages and enables innovation. There are ways of operating the electricity market which are very favourable to incumbents and existing technologies, and other ways which are more outcomes-based and therefore drive innovation."
"It always changes, it's the nature of the sector. A couple of things I would highlight: I think increasingly we'll see real clusters emerging in the UK in particular regions and geographies. We already see that in Bristol, Glasgow, the Midlands, and London. Part of our job as financial institutions is to help those clusters grow. Where we've seen innovation happening quickly within economies, it's often been around clusters where you can join up different companies, where talent can move to where it's most needed, where people can co-create. The sector is now reaching a scale where we'll see more and more of that.
I haven't mentioned AI yet, but clearly that's going to be an important driver for this sector, both on the supply side as we see AI-enabled climate technologies accounting for more of the market. We've got clients using that to support energy reduction in building usage, and you're going to see more and more of those applications.
But also on the demand side, in terms of the load that AI and data centers create, it's really important that we develop that in a way that minimizes emissions footprint and energy consumption, but also integrates with the wider grid where it has potential to actually enable the grid to operate more efficiently."
"We want to be part of the solution in this space. We think the UK has enormous potential to lead in this sector, to deliver growth, and also to deliver climate and energy outcomes which can reduce emissions here and scale really quickly globally. We're really keen to support that journey and to engage with government, policymakers, regulators, and the wider stakeholder universe.
In terms of what we need to do: first, I think we need to use our connectivity. We've got a really broad perspective across the industry which is often much harder for individual climate tech companies to have because of size or because they've got other things they need to be doing.
We have the privilege of being able to take that helicopter view, so bringing that expertise and knowledge to the coalition, and helping the coalition bring that to government and other decision makers, will be really important.
The other thing is learning how best we can support companies in this sector. We've done a lot to adapt our product and proposition to this sector, but we would not argue that it's perfect or that it won't change over time. Anything we can do to understand companies in this space better so we can support them better is really important as well."
HSBC Innovation Banking's decision to join the Clean Tech UK Coalition represents a significant vote of confidence in the UK's clean tech ecosystem. With their global reach, deep financial expertise, and long-term commitment to net zero, HSBC Innovation Banking is uniquely positioned to support clean tech companies through their growth journeys, from early-stage innovation to international scale-up.
Tim's insights reveal both the challenges and immense opportunities ahead. While barriers around policy clarity, capital intensity, and skills gaps remain, the UK's improving policy environment, emerging regional clusters, and the transformative potential of technologies in energy and carbon management paint an optimistic picture for the sector's future.
As Tim emphasized, the transition to net zero isn't just the right thing to do environmentally, it's increasingly the right thing to do economically. With financial institutions like HSBC Innovation Banking committed to embedding themselves in this growth sector, connecting global supply chains, and actively engaging in policy dialogue, the UK is well-positioned to lead the clean tech revolution.
We're excited to have HSBC Innovation Banking as part of the coalition and look forward to working together to unlock the full potential of UK clean tech innovation.
