Why Does Corporate Procurement Still Fail Climate Startups and How to Fix It?

We take a practical look at barriers for climate startups in corporate procurement.

Corporate procurement is meant to bridge innovation and scale, especially in climate tech. A large contract can be transformative, delivering scale, credibility and revenue almost overnight. In theory, procurement serves as the gateway for new technologies to reach real-world deployment. But for most early-stage climate startups, the procurement process is slow, opaque and deeply misaligned with the urgency of the climate crisis. Corporates may promote ambitious net-zero goals, but procurement teams tend to prioritise cost control and risk reduction over innovation and impact. The result is predictable: most climate tech never scales beyond a pilot, and many never even get that far.

What Are Systemic Procurement Barriers Facing Climate Startups?

Startups face multiple structural barriers that have little to do with the quality or impact of their solution.

• Vendor qualification processes are often prohibitively complex. Many corporates require suppliers to demonstrate years of financial history, provide established references, and hold certifications that early-stage companies do not yet have. These requirements are often non-negotiable, even for non-critical systems or pilots.

• Incentives within procurement teams are misaligned. Procurement professionals are typically evaluated based on short-term savings, adherence to compliance processes, and risk avoidance. There is little incentive to take on an early-stage vendor, even if the solution has the potential to deliver long-term sustainability value.

• Decision-making cycles are extremely slow. Many startups report that initial conversations drag on for over a year before a pilot is even discussed. For companies operating with limited runway, that timeline is not feasible.

• Corporate buyers often have limited appetite for risk. This is understandable in large enterprises with complex supply chains and regulatory exposure. But it means that climate tech solutions with breakthrough potential are routinely dismissed in favour of more familiar, less effective technologies.

• Many procurement teams lack climate literacy. They may not be equipped to evaluate a solution’s potential for emissions reduction, lifecycle impact or integration into broader decarbonisation strategies. As a result, promising startups often fail to communicate their value in terms that procurement teams understand.

According to Vizibl’s 2024 Procurement Decarbonisation Readiness Report, 78 percent of procurement leaders say Scope 3 emissions are important, but only 39 percent feel prepared to address them. The gap between ambition and implementation is wide, and startups fall into it.

Why Does the Status Quo in Procurement Persist?

This broken system persists not because of individual resistance, but because of institutional inertia. Large companies are designed to optimise for predictability and scale. Procurement departments are generally still measured by their ability to deliver cost savings, manage contractual risk and ensure compliance. None of these goals naturally encourage experimentation with early-stage suppliers.

Even when corporate leaders promote sustainability agendas, internal structures do not always follow. Legal and compliance departments tend to default to caution, especially when supplier contracts involve technical complexity, intellectual property or long-term liabilities.

Procurement teams are often time-poor, under-resourced and unfamiliar with climate innovation. The result is a default culture where “no” is the safest answer. Few have the mandate or support to explore high-impact but unproven solutions. Even fewer have the bandwidth to manage small pilots when there are more pressing tasks like renegotiating rates with established suppliers.

While many corporates are now setting science-based targets and making public climate commitments, very few have translated those goals into meaningful changes to procurement KPIs. Until those internal metrics change, procurement will continue to act as a brake on innovation.

What Are The Real-World Consequences for Innovators?

For climate tech startups, the consequences are significant and immediate. Founders waste months chasing procurement contacts, navigating onboarding portals and submitting documentation, only to discover that the company is unwilling to move forward without multi-year financials, a reference from a relevant existing client or minimum revenues: all criteria that are viewed as important badges of being a ‘safe’ company to do business with.

Many startups burn critical time and capital on pilots that never scale. The “valley of death” between a pilot and commercial adoption is well documented in climate tech. Founders frequently cite this transition as their most difficult phase. Some pivot to less impactful markets or abandon climate innovation altogether. Others simply run out of cash before securing a meaningful customer, as they go through the other “valley of death” in fundraising.

A recent article in Business Insider highlights the fragility of the climate tech ecosystem, especially in the face of policy headwinds and funding uncertainty. Founders can no longer afford to operate under the assumption that public sector support or investor capital will bridge the gap. Scalable revenue from commercial customers is essential, and broken procurement systems are standing in the way.

Investor sentiment is shifting, too. Climate tech founders are now expected to show early commercial traction. “Doing cool climate tech stuff” is no longer sufficient to raise a Series A. Without customers, even the most innovative solutions are seen as high risk.

Is There A New Playbook for Procurement?

To unlock the climate solutions we need, procurement must become an enabler of innovation rather than a blocker. That requires a new approach with six core changes.

1. Change the KPIs

Procurement success should be measured not just in cost savings, but in emissions reductions, supplier innovation and contribution to strategic sustainability goals. This means rethinking performance reviews, incentive structures and departmental objectives. Buying into true innovation can be risky, but it can also be extremely rewarding.

2. Build startup-friendly procurement tracks

Large organisations can create streamlined onboarding pathways for early-stage companies. These might include simplified contracts, lighter compliance checks and shorter-term pilot agreements with defined escalation pathways.

Municipal innovation programs have pioneered this approach, offering startup-specific RFPs and sandbox-style contracts that reduce the friction of engagement.

3. Create innovation sandboxes

Corporates should designate operational spaces where climate solutions can be tested with support from internal champions and fast feedback loops. These sandboxes provide room for controlled experimentation without risking core operations.

4. Educate and upskill procurement teams

Procurement professionals need better tools and training to evaluate climate solutions. This includes lifecycle analysis, emissions impact modelling and basic knowledge of new climate technologies. Without this knowledge, teams cannot make informed decisions.

5. Share risk with partners

Corporate partners can use performance guarantees, insurance, blended finance or milestone-based payment structures to de-risk engagements with startups. Risk-sharing builds trust and encourages suppliers to invest in quality and delivery.

6. Celebrate successful partnerships

Procurement teams should be recognised when they deliver positive innovation outcomes. Sharing case studies, internal stories and emissions data from successful projects helps build momentum and confidence in future engagements.

What Does It Look Like in Practice?

Some organisations are already demonstrating what good looks like.

Google, for example, has signed over 170 clean energy contracts totalling more than 22 GW of renewable energy capacity. This has been achieved through an intentional strategy that integrates procurement, energy policy and sustainability goals. They’ve even started requiring their suppliers to match 100 percent of their own electricity use with carbon-free energy by 2029.

Private equity firm Carlyle has taken a different but equally impactful approach, aggregating procurement across its portfolio companies to stabilise renewable energy supply chains. This reduces risk for suppliers and ensures continuity for developers.

These are not just PR stories. They represent deliberate structural reforms in how procurement teams operate, and they offer blueprints for other companies to follow.

How Can Nexus Help?

At Nexus, we help startups and corporates meet in the middle. For climate founders, we provide strategic support on how to position their solution for procurement audiences. This includes framing the value proposition in terms of risk reduction, integration ease and measurable climate impact.

We also work with corporate procurement teams to redesign their engagement processes. This includes building innovation tracks, launching pilots, adjusting KPIs and facilitating cross-functional support. Our team brings deep operational experience in both climate innovation and enterprise procurement.

We don’t believe innovation should be lost in translation. Our goal is to make sure that high-impact solutions are given a real chance to scale.

Corporate procurement has long been seen as a function that ensures continuity and cuts costs. But in the climate decade, it must become something else: a driver of decarbonisation and a champion of innovation. Startups cannot do it alone. They need procurement systems that are fast, flexible and fit for the future.

This is not about just doing good. It is about commercial advantage, regulatory preparedness and climate resilience. Companies that modernise procurement today will be better positioned to hit net zero targets, reduce Scope 3 emissions and build a reputation as true innovation partners.

If you are a climate founder, prepare yourself to navigate this system, but also demand better. If you are a procurement leader or executive, ask whether your systems are enabling or delaying the future.

The climate clock is ticking, and procurement reform is long overdue.