Climate change is no longer a moral footnote for tech founders; it is a legislative and commercial driver. The UK has enshrined in law targets to cut greenhouse gas emissions by 68% by 2030, 81% by 2035 and to reach net-zero by 2050. These targets are measured against 1990 levels and underpin the government's Net Zero Strategy: Build Back Greener. The strategy lays out sector-specific roadmaps and budgets, from electrifying transport to decarbonising heating. For startups, this creates opportunities in renewable energy, battery storage, carbon accounting and efficiency software - but also obligations to measure and reduce their own emissions.
Policy signals and market drivers
The Net Zero Council, relaunched in February 2025 to strengthen public-private collaboration, is one indication of the government's commitment to making decarbonisation a mainstream business issue. Meanwhile, the Climate Change Committee's sixth carbon budget (2028-2032) and the seventh budget (2033-2037) will place increasingly stringent caps on national emissions. Large companies are already required to disclose climate risks under the Task Force on Climate-related Financial Disclosures (TCFD); smaller firms are not yet mandated, but investors and corporate customers are asking for carbon data. Software that automates carbon accounting and integrates with supply-chain data is gaining traction.
However, the skills to deliver green solutions are scarce. The Institution of Engineering and Technology's survey reports that 36% of engineering employers say they lack the skills to decarbonise by 2050, while 39% cite sustainability skills as the most needed and 35% say such skills are the most missing. In parallel, energy companies struggle to hire data and software engineers to build optimisation models. Without addressing this talent gap, the UK risks missing its climate targets.
Integrating sustainability into product design
For founders building physical products - such as IoT devices or clean-tech - emissions arise in manufacturing, logistics and use. Designing for repairability and recyclability can reduce lifecycle emissions but may increase upfront costs. Electronic devices with modular components, for example, allow for upgrades without replacing the whole unit but complicate supply chains. There is a clear trade-off: simplicity and lower bill of materials against longer product life and lower carbon footprint.
Software companies also influence emissions. Data centres account for a growing share of global electricity use; moving workloads to renewable-powered regions and optimising code can reduce energy consumption. Some cloud providers now offer carbon-aware scheduling, letting workloads run when renewable energy is abundant. Startups can also build features that nudge end users to adopt greener behaviours - for instance, routing algorithms that avoid congested areas to reduce fuel use.
Finance and incentives
Public funding and tax incentives are available for green innovation. The UK's Green Innovation Fund and Innovate UK grants provide non-dilutive capital for early-stage projects in energy storage, hydrogen and carbon capture. R&D tax credits can offset the cost of developing low-carbon technology. However, obtaining these funds is bureaucratic; application success often requires specialist consultants. Startups should also explore sustainability-linked loans, where interest rates are tied to achieving environmental targets. The trade-off is that missing targets can trigger higher rates, so founders must be confident in their ability to deliver.
Measuring impact and avoiding greenwashing
As consumers and investors become more climate-literate, they scrutinise claims of sustainability. Firms must invest in robust measurement frameworks and third-party audits. The Greenly article summarising the UK's net-zero targets notes that carbon budgets (CB4, CB5, CB6) are legally binding, implying that misreporting may expose companies to regulatory action. With digital traceability tools, it is now feasible to track emissions across supply chains; ignoring this capability may be seen as wilful blindness. On the other hand, exhaustive measurement can be resource-intensive for a startup; the right balance depends on the size of the company and the expectations of its customers.
Towards a climate-positive tech sector
The net-zero transition is not only a compliance burden but a catalyst for innovation. Founders who integrate sustainability into their business model can tap into new markets and attract mission-aligned investors. However, the path is not linear. Companies must navigate skills shortages, high capital costs for green infrastructure and evolving regulations. The winners will be those who see environmental constraints as design parameters rather than afterthoughts, embedding sustainability into every sprint and board discussion.