Barclays says more money needs to go towards transition finance
Barclays Plc suggests that additional funding should support climate transition projects that are too sophisticated for venture capitalists and too new for infrastructure investors.
According to Daniel Hanna, the global head of sustainable finance at Barclays’ corporate and investment bank, the finance industry has not adequately focused on the “missing middle” of climate transition deals.
“There’s a missing middle of capital between the venture and the infrastructure,” Hanna said Thursday at the Bloomberg Sustainable Business Summit in London.
Barclays is expanding its emphasis on transition finance by establishing a dedicated team of over 100 bankers earlier this year. They have also issued new guidelines to their staff on dealmaking strategies.
Also read: Bank of America expands energy transition business amid rising demand
Daniel Hanna mentioned that choosing the right stage to invest in a green project can greatly impact returns, noting that venture capitalists have recently experienced unsuccessful deals.
“There is actually quite a lot of very early stage venture capital focused on climate tech”, and “last year, climate venture capital had a terrible year,” Hanna said. “You saw a reduction globally in all types of venture capital,” though climate tech actually grew in the UK, he said.
Rashmi Ghai, the global head of sustainability and ESG at Citigroup Inc.’s commercial bank, emphasized that mid-market companies, with annual revenues ranging from $10 million to $3 billion, play a crucial role in the global effort to decarbonize.
Also read: Barclays releases revised climate change statement & transition finance framework
“They aren’t maybe the face of the industries, but they’re definitely the driving engine of a lot of industrial and consumer companies,” Ghai said at the Bloomberg summit. “There’s no real way to decarbonize the global economy without the decarbonization efforts of these mid-market players.”
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