Sustainable Ventures report: ‘Advancing AI’s Potential for Climate Innovation - Adoption Insights from the Frontline of UK Climate Tech’ provides new analysis of data drawn from 3,345 high-growth climate tech startups provided by Beauhurst. The report, alongside qualitative insights through interviews with startup founders, investors, and technology providers, enabled Sustainable Ventures to assemble emerging perspectives on the benefits of AI. It explores AI’s role and potential in accelerating the development and deployment of new innovative solutions by improving innovation, data analysis, faster prototyping, and assessing risks. The report also provides recommended solutions to accelerate growth in climatetech startups, and an “AI Implementation Roadmap for Startups”.

Sustainable Ventures’ analysis of Beauhurst data, with input from Cambridge Judge Business School EMBA research, mapped AI adoption across 3,345 high-growth UK climate tech startups. Key findings include:

• 9.7% of UK climate tech startups are AI-related, a rate that is double the UK high-growth startup average (4.6%) and higher than in financial services (6.9%). The proportion of AI-relevant climate startups has increased by 17% per year on average over the past five years, again outstripping the UK’s wider startup scene. underscoring AI's rising prominence as a core enabler of climate innovation
• In 2024, 40% of all UK climate tech funding went to AI-related startups, up from 20% in 2022, while investment in non-AI ventures plateaued with growth of just 0.5%., with H1 2025 figures pointing to a sharper decline ahead
• Software-led businesses attracted £2.19 billion in 2024, equal to 64% of all UK climate tech funding, including £1.3 billion of AI-related investment - double the share they commanded in 2022
• By contrast, hardware-led climatetech investment fell 22% from £1.61 billion in 2022 to £1.25 billion in 2024, and these companies captured just 4% of AI-related funding (£90 million), despite the fact that around 80% of global emissions stem from hardware-intensive sectors. Their share of total UK climate tech investment has fallen from 60% in 2021 to just 37% in 2024
• The energy and mobility sectors together accounted for 88% of AI-related climate tech investment in 2024 (£1.2 billion of £1.4 billion) and now make up 64% of all climate tech funding (£6.2 billion of £9.7 billion)

The success of energy and mobility startups shows the value of hybrid models – combining AI-driven software optimisation with scalable hardware deployment. Sectors like EVs, batteries and smart grids generate rich data streams that make them naturally compatible with AI, enabling measurable efficiency gains. Other sectors such as agriculture and the built environment are beginning to follow this path, but need targeted support to build the digital foundations that make these hybrid solutions viable.

Andrew Wordsworth, Founder, Sustainable Ventures said: “The level of investment in AI and climate tech indicates that investors interested in the sector are increasingly viewing AI integration as a key marker of future scalability, and competitive edge. AI clearly has a fundamental role in accelerating the growth of climate tech startups and helping the UK realise the commercial benefits of the net zero transition.

“However, it’s important to remember that the climate crisis, at its root is a hardware problem, and there's a growing risk that AI becomes a ‘shiny object’, attracting disproportionate focus toward easily digitised industries and business models, while leaving behind more traditional, harder-to-transform sectors - such as heavy industry, the built environment and agriculture. These sectors due to their higher emitting CO2 can play more of a key role in helping meet CO2 targets. The solution is that AI can play a vital role in helping these ventures build scalable hybrid hardware/ AI software solutions that drive truly transformative climate impact similar to what has been seen in the energy and transport sectors.”

Julien Vaissieres, Founder and CEO at Batch.Works commenting on the report said: “AI is fundamentally changing how we work with the physical world. At Batch.Works, we're constantly running design iterations to optimise for material efficiency, slashing waste and lead times. The potential is immense! However, to deploy these tools across the wider climate-tech landscape, particularly in capital-intensive areas like ours, the technology often isn't the bottleneck. It's the ecosystem. We have to get serious about creating a shared infrastructure of investment, specialised knowledge, and hands-on skills to truly unlock this next wave of innovation.”

Sustainable Ventures recommends that further action is needed to ensure AI benefits are distributed across the full climate landscape, not just digital-first or software-led business. 

• Accelerating the AI readiness of hardware-led companies must become a national strategic priority. Sustainable Ventures recommends a model of integrating AI driven software optimisation with hardware should now be replicated across the rest of the economy
• Investors must look beyond the natural pull of faster, easier returns and embrace the longer-term opportunity of scaling hardware solutions that can deliver deep emissions reductions. That means more patient capital, but also more active engagement and support for the hardware developers themselves
• Targeted public investment, data-sharing initiatives, and accessible AI tooling, such as the Net Zero Innovation Portfolio must prioritise hardware-centric and regionally distributed startups

Drawing on its work with hundreds of startups and insights from technical and industry partners, Sustainable Ventures has developed an “AI Implementation Roadmap for Startups.”  The 8 step guide includes helping startups assess their digital and AI readiness, identify high-impact operational use cases, and develop the partnerships and funding needed to move forward. The guide will help businesses close the AI and digital transformation gap, by strengthening data infrastructure, data maturity and building internal capability.

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