The Venture Climate Alliance (VCA), an organization created by global venture capital firms, has launched with the goal of encouraging the industry to increase commitments to climate technology.

With 23 VC firms across the US and Europe, including founding members Tiger Global, Prelude Ventures, Energy Impact Partners and S2G, among others, the VCA has laid out guidance for members and portfolio companies to ensure they meet requirements to achieve net-zero emissions by 2050, with the stated aim of using “methodology and metrics” to determine what makes a good climate investment.

Portfolio firms will be given guidance to decarbonize operations, for example by using emission-free data centers, less energy-intensive software and low-carbon supply chains. Generalist VCs must make routine assessments of their carbon footprint and align early-stage bets with net-zero goals.

Venture capitalists focused on climate change who participate in the VCA must ensure that the technologies they invest in have the capacity to reduce carbon dioxide emissions by a minimum of 100 megatons.

The VCA has been approved by the United Nations as part of its Race to Zero campaign and falls under the Glasgow Financial Alliance for Net Zero.

Climate tech investment has declined compared to last year, with fintech attracting $79 billion and the climate tech sector raising $50 billion in 2022, a 10% drop from the previous year.