JP Morgan Calls for Green Tech Funding Rethink
JPMorgan Chase & Co.
In certain segments of the green technology industry, such as sustainable farming, start-up firms are facing a capital deficit, prompting a call for the development of a new funding model, according to Chuka Umunna, Head of EMEA ESG and Green Economy Investment Banking at JP Morgan.
Speaking at the Reuters Energy Transition Europe 2023 event in London, Umunna emphasised the need to construct a funding model tailored to green tech companies.
He highlighted the current imbalance in capital distribution, with a significant portion flowing towards sectors like electric vehicles and low-carbon energy, leaving areas like sustainable food ecosystems, which can, in some cases, have a more substantial impact on global greenhouse emissions, with insufficient funding. Umunna attributed this disparity, in part, to the capital requirements of early-stage green tech firms.
The challenges facing capital raising for green technology companies extend beyond financial considerations. Geopolitical uncertainties and concerns about a weak economy, particularly in Europe and public markets, have also contributed to the hesitation in investment. Despite these obstacles, Umunna pointed out a positive trend in increased deal activity in private markets.
Furthermore, the bureaucracy surrounding permitting the necessary infrastructure for renewable energy and other projects has added to the hindrances in green tech investment.
Despite these challenges, Umunna sees a vast opportunity for banks like JP Morgan in the shift towards a greener, lower-carbon economy. However, he urged a realistic perspective on the role of the banking sector, emphasising its function to enable and facilitate the transition rather than single-handedly delivering it.
Umunna underscored key areas, such as energy system reform and changes in consumer behaviour, over which banks have limited control in the overall decarbonisation process.
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