Climate tech companies have enjoyed an investment surge in 2022, but the funding falls short of the $1trn a new report says is needed to curb climate change. The report was issued by Egypt and the UK ahead of the 2022 UN Climate Change Conference, or COP27.

Moreover, sceptics have suggested that throwing money at the climate problem won’t make it go away. To make real change, they urge politicians and corporate chieftains around the globe to make and live up to commitments to halt global warming.

These issues have come to the fore as the COP27 climate summit kicked off in Egypt this week. From 6–18 November, representatives from more than 200 governments, NGOs and business bosses will rub shoulders in Sharm El Sheikh while trying to agree on the next step forward to tackle environmental collapse.

However, some of the reporting suggests that it might be more likely that the conference will regress to the regular mud-slinging and angling for advantage that have become commonplace at these conferences.

Already, countries from the Global South have urged rich countries to meet the $100bn climate finance pledge made in 2019, and to compensate vulnerable nations for the irreparable damage done to the climate by predominantly nations in the Global North. Elsewhere, the UK’s defenestrated Prime Minister Boris Johnson has taken the climate summit as an opportunity to burnish his tarnished legacy, calling on the conference to fulfil the promises made at COP26 in Glasgow.

It is, in other words, easy to let pessimism overshadow some of the positive results seen in the climate tech sector. Climate tech is a catch-all term for any company providing a technological solution that would arguably help tackle climate change. The broad church of companies in this sector include everything from solar panel start-ups to blockchain-powered supply chain ventures, from ocean-cleaning robots to innovative companies hoping to decarbonise cities.

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Climate tech investment is soaring

New data from our parent company GlobalData shows that environment-focused tech companies have raised more than $2.41bn across 121 capital raisings so far in 2022. Of that, $1.54bn has come from venture capital (VC) funding rounds.

The total amount of climate tech funding in 2022 is up from the $534m raised across 45 rounds last year. However, the capital raised is dwarfed by the $7.48bn injected into the industry across 111 venture financing, private equity, equity offering and debt offering deals in 2020.

The real number could be even higher. Last week, Big Four accountancy firm PwC’s State of Climate Tech 2022 report suggested that more than $50bn in VC money has been injected into climate tech companies this year. That would mean that more than a quarter of every venture dollar invested in 2022 has gone to a climate tech enterprise.

While providing slightly different numbers, both the GlobalData and the PwC datasets point towards a trend where investors still have an appetite for providing climate tech funding.

“In the face of its first real test over the past decade, climate tech markets have shown encouraging resilience," said Will Jackson Moore, global ESG leader at PwC UK. "With a background of Russia’s invasion of Ukraine, inflation, and a sharp correction in the capital markets, there was all the potential for investor confidence to crumble. The task is to build on momentum, with more attention on early-stage funding and further boosting technologies with the highest potential for reducing emissions.”

COP27 organising countries estimate $1trn needed to tackle climate change

The robust results of climate tech funding rounds so far are encouraging, but they fall some way short of the investment needed to tackle climate change. That is according to a new report commissioned by current and previous climate summit organisers Egypt and Britain, ahead of COP27.

"The world needs a breakthrough and a new road map on climate finance that can mobilise the $1trn in external finance that will be needed by 2030 for emerging markets and developing countries other than China," said the report, noting that current investment stood at around $500m.

It added that the biggest increase should come from the private sector, both domestic and foreign, while annual flows from development banks should be tripled, Reuters reported. The report also argues that concessional loans that offer more favourable terms than markets should be stepped up to unlock "substantial climate finance".

Will climate tech funding save the planet?

Climate tech funding recovering from its 2021 dip is great news. Rising capital flows highlight that companies are taking the environmental aspect of ESG seriously. However, it is important to recognise that technology itself won't be enough to save the planet. Contrary to what boisterous press releases from climate tech start-ups may suggest, technology is not a silver bullet to halt environmental collapse.

Technology can provide many advantages for organisations stepping up their efforts to stop global warming. Tech can provide data about carbon emissions, help them reduce traffic congestion, empower smart grids to distribute electricity more efficiently, and provide digital models to know where city planners need to up their efforts – essentially every promise ever made by smart city evangelists.

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Efforts like these are admirable, but they fall short of what environmental experts suggest is needed to tackle climate change: a commitment from both politicians and companies around the world to step up their game.

NGOs and intergovernmental organisations around the world – such as the UN Development Programmethe OECD and the CDP – have called for not just active commitments, but for businesses and governments to be held accountable to those commitments in a transparent way. Without that, businesses will continue to fail to recycle plastic, introduce carbon-catching technologies and halt the onslaught of global warming.

As the UN Secretary-General António Guterres put it at the opening of COP27: “Humanity has a choice: cooperate or perish. It is either a climate solidarity pact – or a collective suicide pact.”

Editor's note: This article originally appeared on our sister site, Verdict.