Venture capital firms team up to cut carbon emissions

Leaders from venture capital firms are launching an alliance to support climate-friendly startups and encourage net-zero emissions in businesses across many industries. 

Members of the Venture Climate Alliance (VCA) are committed to reducing greenhouse gas emissions to net-zero or negative by 2050 and sharing best practices and methods to reach that goal through venture capital investments. 

“We want everyone involved,” said Dan Firger, co-founder and lead advisor of VCA. “The members are driving the agenda themselves and trying to figure out what they want to do together.” 

The alliance officially launched Tuesday and currently includes 23 venture capital firms, a number Firger and other leaders are hoping to increase. As leaders work to recruit new participants,  the group will explore best practices to integrate climate-friendly solutions to businesses. 

Developers of the alliance said that the project allows for collaborative steps to be made across the finance world to work toward environmental goals. Alexandra Harbour, founder and chair of the VCA and principal at Prelude Ventures, said that many founding members already started working on climate-friendly targets, but that efforts towards those targets and future goals will be more closely aligned with the VCA. 

“The work has been happening. It's just that collaboration around the work has not been happening,” Harbour said. “And so I think that that's what this effort is, is coming together and collaborating as opposed to everyone doing the work, but kind of behind the scenes and in a black box.”

Among a number of initiatives to increase eco-friendly business practices, including the U.N.’s carbon emissions cutting program, the Race To Zero campaign, the VCA stands out, according to Jason Pontin, partner at venture capital firm DCVC, which is a founding member of the alliance. 

“This is the common work of humanity at the moment. And there seems to be a general commitment across sectors and across markets to working on this,” Pontin said. “But within venture capital, this is a big deal. This is the first effort of its sort within private equity.”

The main goals of the VCA are to achieve net zero or negative emissions by 2030, to encourage portfolio companies to reach net zero emissions by 2050, assist portfolio companies in reducing carbon emissions and to be transparent with firms’ progress in achieving these targets.

Founding members of the alliance include Prelude Ventures, Capricorn Investment Group, DCVC, Energy Impact Partners, Galvanize Climate Solutions, S2G Ventures, Union Square Ventures, Tiger Global Management, World Fund and 2150 — and the list of new members is still growing as firms learn about the alliance, founders said. 

“There are a lot of toolkits and frameworks for larger companies to be able to assess their emissions,” said Johanna Wolfson, a general partner at Azolla Ventures, a member of the VCA. “However, those tools are not those tools and frameworks are not necessarily appropriate or even implementable by very early stage startup companies.”

VCA leaders said the alliance is a powerful step forward in climate solutions, because it spans beyond companies and startups in industries like climate technology that would be expected to address environmental concerns. 

Keri Browder is the director of impact accountability at Prime Coalition, which invests through programs like Azolla Ventures and is partnering with the VCA to develop methodology to cut back on emissions and encourage eco-friendly business solutions. 

“I think that it can't be overstated how critical it is that we're thinking about this now with ventures and new companies,” Browder said. “So what we're doing in the work now will hopefully have a much longer term positive ripple effect for the standard for managing companies, whether they consider themselves climate companies or not, moving forward.”