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The state of UK climate tech | Sustainability insights
Evidence tier: A1 Evidence type: Auto-discovered official publication Source: Barclays browser-verified publication index Official publication date: 2026-06-26 Captured: 2026-07-18T16:32:07.793Z
- Climate tech firms show higher confidence than the wider UK business population
- Firms have a stronger emphasis on developing people and expanding physical capacity
- Skills shortages and access to finance remain key constraints
It has been an interesting period for UK climate tech. As the sector matures, firms are feeling more confident about where they’re heading and what it will take to grow. At Barclays, we’ve consistently championed the sector’s potential and worked across the ecosystem to understand and address the barriers that can hold it back.
Our latest ‘State of UK climate tech’ report reflects this shift, showing firms entering 2026 with strong confidence and a clearer focus on scaling. But it also paints a more nuanced picture beneath this progress, with persistent challenges continuing to shape the sector’s growth.
Barclays’ analysis examines how confidence, investment intentions and access to finance have evolved in Q4 2025 from Q4 2024, and how the sector compares with the wider UK business landscape. While the sector is feeling more mature, many structural challenges identified a year ago remain.
Read Barclays' paper
The state of UK climate tech: consistent growth, persistent barriers
A sector outperforming the wider economy
Climate tech firms remain markedly more optimistic than the wider UK business population. Across key measures, sentiment is consistently stronger:
- 77% of climate tech firms are positive about the political environment, compared with 51% of UK businesses
- 87% are confident in the strength of the UK economy, compared with 65%
- 99% are confident in their own business outlook, versus 86%.
Confidence has strengthened over time, rising from 92% in 2024 to 99% in 2025. This shows optimism has become near-universal and increasingly driven by sector momentum.
From innovation to scaling business
This confidence is translating into tangible growth, with climate tech firms expanding headcount and revenues as they move from early-stage innovation towards commercial delivery at scale.
In 2024, 85% of climate tech firms planned to grow their workforce. A year later, firms reported an average headcount increase of eight, compared with an average increase of four across other UK businesses.
Climate techs are also significantly more likely than other UK businesses to have increased revenue by more than 75% by the end of 2025, compared to the same period in 2024.
This reflects a shift towards operational maturity, with firms focused on scaling delivery.
Investment holds steady as priorities evolve
Despite rising confidence, overall investment intentions have remained stable, with around two thirds of firms planning to increase investment over the next 12 months, unchanged from the previous year.
What is changing is the focus. Firms are placing greater emphasis on the capabilities needed to scale, particularly training and operational capacity, rather than simply expanding headcount.
The sector is moving towards disciplined, capability-led growth rather than rapid expansion.
Skills shortages are constraining growth
Access to skilled talent remains a major barrier to scaling. Nearly nine in ten firms report that hiring challenges are limiting growth.
This is consistent with 2024 findings: 29% of firms continue to identify education-to-employment pathways as a key lever for growth.
Without targeted action, skills shortages risk becoming a key bottleneck, slowing the sector’s next phase of growth.
Access to finance is evolving, but not easing
The picture on finance is evolving but not easing. More firms report that access to private capital supports long-term growth, rising from 69% in 2024 to 72% in 2025.
At the same time, positive sentiment towards public funding has declined, falling by 5% over the same period. Most firms still face obstacles: only 9% report no issues accessing finance.
Challenges are shifting: cost pressures have softened and concerns about high interest rates have fallen (34% to 26%). However, more firms now cite the complexity of finance application processes as a barrier (rising from 21% to 25%).
This indicates that despite some improvements, access to finance remains a structural constraint.
Unlocking the opportunity
Climate tech is central to the transition to a low-carbon economy and represents a significant opportunity for growth and job creation.
There are three clear areas where government policy action can unlock the sector’s full potential:
1
Maximise support for climate tech firms across the UK and simplify funding pathways
2
Develop a national network of accelerators and hubs to support commercialisation and deepen networks
3
Continue to bolster the coordination and impact of public finance institutions
The sector is confident but continues to face persistent challenges in accessing talent and finance. Investment levels are holding steady, and many barriers remain unchanged.
The challenge is no longer proving potential, but enabling scale.
Through its work with climate tech companies, Barclays continues to build a detailed understanding of the challenges firms face as they scale, helping to connect them with the capital, expertise and networks needed to support growth.
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