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Addressing the Financing Needs of Sustainable Startups

Learn how banks are supporting sustainability-driven startups. Plus, see how the RISE Awards honour those shaping the industry’s future.


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Funding is one of the most crucial factors in determining whether early-stage companies can successfully grow and, eventually, scale. Sustainability-driven startups, in particular, may face longer research and development (R&D) timelines, greater capital expenditure requirements, and more complex regulatory standards linked to green finance.


While these startups rely heavily on angel investor and venture capital funding in their earliest stages, banks also play a central role in not only financing but also facilitating access to thematic capital and navigating evolving policies and regulations.


As this need grows, initiatives that recognise and accelerate innovation in this space are becoming increasingly important. 


The first annual Sustainable Times RISE Awards, taking place in London on 6 November, will be celebrating banks that have demonstrated a commitment to addressing the financing needs of sustainability-driven startups.


Ahead of the event, we spoke with key players across the financial sector to understand their efforts to enhance financing opportunities for sustainability-driven startups, identify areas for further improvement, and explore how startups can maximise their relationships with banks.



The multi-faceted role of banks as lenders


Small and medium-sized enterprises (SMEs) make up 99.8% of businesses in the UK — and nearly a third of the country’s greenhouse gas emissions. As the UK works towards its goal of reaching net zero by 2050, achieving sustainable growth for these companies is both a climate imperative and a business opportunity.


Over the years, we have seen the introduction of various sustainable financing mechanisms, ranging from sustainability-linked loans to green innovation grants and tax relief schemes (e.g. Enterprise Investment Scheme).


While the UK government has committed nearly £5 billion in funding to help UK businesses become greener, public investment alone isn’t enough. Increased engagement from private-sector sources of finance and investment is essential in enabling startups to drive their sustainability efforts. 


The vast majority of the UK’s SMEs need support and advice to adapt and thrive in a low-carbon economy, with those looking to deliver sustainability-led products and services often needing more specialist help. 


Banks provide the capital and networks to finance projects of various forms and sizes, while often acting as delivery partners for government-backed initiatives. Beyond these, they also act as enforcers of regulatory and market standards.

With regulatory scrutiny tightening across all dimensions of sustainable finance in the UK, banks need to ensure they have the right mechanisms in place to conduct due diligence on the startups they finance, including their impact KPIs.


If there’s a fundamental ingredient for a successful investment proposition, it’s having a clear business model that demonstrates the startup’s credibility and potential to deliver attractive commercial returns alongside lasting impact. Startups that can achieve this are best positioned to benefit from funding strategies that are aligned with green targets and subsidies.


Spotlighting local efforts


Banks like NatWest, the largest business bank in the UK, offer a whole ecosystem of support for startups beyond traditional finance.  


After surpassing its 2025 target of providing £100 billion in sustainable and climate financing earlier this year, NatWest announced a new financing target of £200 billion by 2030. 


But the bank’s support for startups goes beyond capital. Its approach to supporting sustainability-driven startups is based on a combination of structured programmes, grants, and tailored finance and advisory channels.


One of its flagship initiatives is the NatWest Accelerator programme, headed by Darren Pirie. It offers free support to entrepreneurs in the form of one-to-one coaching, investor readiness workshops, peer networking, and access to modern coworking hubs across the UK. To mark the programme’s 10-year anniversary, NatWest launched a nationwide pitching competition, with a total prize of £1 million to be awarded across several rounds.


NatWest also equips founders with the tools and insights needed to make more informed, data-driven decisions. These include the Carbon Planner, Sustainability Solutions, and Building Efficiency Assessment Tool, which allow businesses to monitor and measure their impact.


On the advisory side, financial institutions can provide guidance to early-stage companies on integrating sustainability and impact into their business models. These include advisory services related to ESG scoring frameworks, regulatory insights, investor readiness training, and disclosure and reporting.


There’s more to be done


Notwithstanding this increased support for sustainability-driven startups, the broader funding landscape (in the UK and abroad) still presents challenges. The capital exists, but the risk appetite often doesn’t.


Chancellor Rachel Reeves addressed this issue by advocating for greater risk-taking within the UK to encourage innovation and stimulate the economy. “For too long, we have presented investment in too negative a light,” she said. “We’ve been quick to warn people of the risks, without giving proper weight to the benefits.” 


Across the pond, one organisation aiming to change that dynamic is Enduring Planet, a climate-focused lender providing founder-friendly working capital and financial advisory services to US-based climate-focused SMEs. Its Fractional CFO platform provides comprehensive back-office solutions, such as bookkeeping, accounting, financial modelling, reporting, and introductions to investors.


CEO and founder Dimitry Gershenson observes that while financial institutions may express a strong desire to take climate action, many hesitate when it comes to committing capital. Ironically, they seek impactful outcomes but are not willing to take the risks.


“Climate startups are out there building solutions to problems that literally threaten our future, but they are forced to scrape by because investors are still using playbooks from the last century,” Gershenson says.


“If institutions really want to support this ecosystem, they need to stop waiting for the ‘perfect’ companies and start backing companies that may be imperfect but are world-changing.” 


Things financiers wish founders knew


Both lenders and borrowers are on a learning curve. As Enduring Planet’s Gershenson tells Sustainable Times, founders often make the mistake of seeking help when they are operating with a limited financial runway — at which point their options are constrained and the terms are rarely in their favour.


His advice for startups? Treat financial institutions as long‑term partners by maintaining transparent communication at all times, especially when things are not going smoothly.


Another misconception among some founders is that the business can survive on purpose alone, without commercial viability. But this couldn’t be further from the truth.  


“We love mission-driven founders, but the numbers still have to work. Investors and lenders are not just betting on ideas, they are betting on execution,” Gershenson explains.


“At the end of the day, the startups that succeed in raising capital are the ones who can show both a bold vision for impact and the financial discipline to deliver it.”

NatWest’s Pirie also notes that some founders develop tunnel vision around securing funding, causing them to overlook the broader ecosystem of support that financial institutions provide.


“Many startups expect immediate financial backing, but we often begin with guidance and mentoring to help them become investment-ready,” Pirie adds. “It takes time to build relationships, refine the business, and unlock the right opportunities.”


Choosing the right financing partners


In the current environment characterised by slower economic growth, higher inflation, and rising geopolitical uncertainty, startups are more reliant on external financing and support than ever. Therefore, it’s vital that startups partner with the institutions that are most aligned with their needs.


Head of Treasury & Trade Solutions UK at HSBC Innovation Banking David McHenry believes that the best banking partners have a sound understanding of the startup ecosystem, strong advisory expertise, and robust financial and technological capabilities that can evolve and scale with a business’s needs over time.

McHenry adds, “From providing access to necessary funding when needed, guidance through financial challenges or offering more sophisticated products and solutions, a strong banking relationship can provide businesses with the resilience and adaptability to navigate rough waters.”


Pirie further notes that startups often thrive in ecosystems where knowledge-sharing, partnerships, and community engagement are valued. “Financial institutions have a key role to play in nurturing these ecosystems — not just through funding, but by opening doors, offering mentorship, and helping startups navigate complex regulatory or operational landscapes,” he tells Sustainable Times. 


“Ultimately, sustainable innovation is not just about doing less harm — it’s about creating new value. And that’s where the most exciting opportunities lie.”


Recognising the banks driving sustainable finance


Are you a UK-based financial institution demonstrating exceptional commitment to funding sustainable initiatives and green finance solutions? Nominations are now open for the RISE Awards Best Bank for Sustainable Finance category.

The 2025 Sustainable Times RISE Awards recognise startups and growth ventures making significant contributions through innovation across sustainability and impact. Featuring 19 award categories, the RISE Awards celebrate companies and investors shaping the future.


By participating in the awards, you’ll have the opportunity to showcase your innovation, build strategic connections with stakeholders, and gain valuable industry recognition that can amplify your presence.






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