LONDON, Nov 13 (Reuters) – Start-up companies in some parts of the green technology industry, such as sustainable agriculture, are missing out on capital and need a new financing model, a senior JP Morgan banker said on Monday.
“We need to build a financing model for green technology companies,” Chuka Umunna, head of EMEA ESG and investment banking at JP Morgan (JPM.N), told the Reuters Energy Transition Europe 2023 event in London.
Umunna said most of the capital raised from green technology flowed into sectors such as electric vehicles and low-carbon energy, while others, such as sustainable food ecosystems that “in some cases make a greater contribution to global greenhouse gas emissions”, have not seen the impact saws. same quantity.
This was partly due to capital requirements for some early-stage green technology companies, he said.
Raising capital for green tech companies in general was not immune to geopolitical turmoil that “scared the market,” as well as concerns about a weak economy, especially in Europe and public markets, Umunna said.
But deal activity in the private markets increased, the former British lawmaker added.
Investments in green technology have also been hampered by red tape, including delays in permitting the infrastructure needed for renewable energy and other projects.
Cleaner energy stocks have had a tough year as investors worry about rising costs, canceled or postponed projects and low investment returns.
Umunna also said a shift to a greener, lower-carbon economy presented huge opportunities for banks like JP Morgan.
But he said the world “needs to be realistic about what the banking sector can do.”
“It is our job to enable and facilitate the transition. We are not in a position to deliver the transition,” he added, pointing to key areas of decarbonization that were beyond banks’ control, including reforming energy systems and consumer behavior.