UK Climate Fund Hits $110M: Why Big Pensions Are Betting on Green Tech

Jan de Vries · 2026-09-08

There's a quiet shift happening in the world of venture capital, and it's not coming from Silicon Valley. It's coming from pension funds in the UK, and they're putting serious money behind a simple idea: that cutting carbon can also deliver strong returns. Clean Growth Fund, a specialist UK ClimateTech VC platform, just announced the second close of its Fund II vehicle. Total investor commitments have now reached roughly $110 million — more than halfway to its $203 million target. That's not just a number; it's a signal. ### Why This Matters for Climate Tech This isn't just another fund close. It's a validation that institutional investors are getting serious about climate tech as an asset class. The fund backs Seed to Series A UK companies whose tech can cut carbon emissions and grow Britain's green economy. The target net return? A robust 20% IRR. That's the kind of number that gets a pension fund manager's attention. The second close is anchored by a $30 million commitment from Border to Coast's UK Opportunities Fund. Strathclyde Pension Fund also chipped in another $13.5 million, bringing its total Fund II commitment to about $41 million. They join Islington Pension Fund and East Riding Pension Fund. Together, this pool partnership represents 18 Local Government Pension Scheme partner funds with combined assets of around $162 billion. ### The Institutional Shift Toward Climate Beverley Gower-Jones OBE, Founder and Managing Partner of Clean Growth Fund, put it plainly: "Border to Coast joining Fund II takes us past the halfway mark towards our target. Increasingly, major institutional investors are looking to UK climate tech for exactly what it offers – strong long-term returns alongside real economic growth right across the country." She added: "We exist to connect British institutional capital with British innovation – the returns and the impact go hand-in-hand." This isn't happening in a vacuum. Across Europe, climate-focused venture managers are raising significant capital in 2026. EU-Startups has reported roughly $770 million across a selected group of comparable fund closes this year alone. That includes London-based 2150's $245 million Fund II, Paris-based SlateVC's $154 million first close, Copenhagen-based The Footprint Firm's $89 million fund, Climentum Capital's $70 million first close, plus $21 million for VitaminºC and $85 million for Ananda Impact Ventures. ### The UK's Growing Climate Tech Ecosystem The UK itself is seeing momentum. London-based Eka Ventures just closed a $107 million impact fund covering sustainability and decarbonisation. Clean Growth Fund's own journey reflects this trend — back in August 2025, Fund II reached a first close of around $66 million. "The UK has the world-class universities, the scientific talent, the regulatory framework, and the policy ambition – and its net zero economy is growing more than three times faster than the economy as a whole," Gower-Jones said. "That is the opportunity Border to Coast is moving to capture, ahead of the curve. The more capital that gets behind British innovation, the faster it scales into global winners." ### Where the Money Goes Founded in 2020, Clean Growth Fund invests in UK-based innovations that significantly reduce greenhouse gas emissions or improve resource efficiency. Their focus areas span power, transport, industry, the built environment, agrifood, and the circular economy. The VC champions a place-based investment strategy. That means backing climate innovation not just in the established science and investment centres of Oxford, Cambridge, and London, but also in emerging hubs across the UK. Their first fund invested in 19 UK startups on track to abate 27 million tCO2e per year by 2030 — that's equivalent to 1.5 times the carbon absorbed by all UK forests. Fund II aims to back 25 companies and scale them. It has already invested in four startups across Sheffield, Bristol, Cardiff, and London. The second close follows Clean Growth Fund's successful exit from Rendesco in May 2026. Lorraine Martin, Investment Manager at Strathclyde Pension Fund, explained their perspective: "We first invested in Clean Growth Fund because it offered a compelling opportunity to deliver strong long-term returns for our members while backing UK innovation that tackles climate change." The takeaway? Climate tech is no longer just about impact — it's about returns. And the people managing billions in pension assets are starting to notice.