What's in a name? Why VCs are debating the term 'climate tech'

As Impact Loop covered late last week, influential Sweden-born impact VC Pale Blue Dot have stepped away from the ‘climate’ label that has largely defined their strategy since founding six years ago.

Rather than ‘climate’ investments – a term that the founders of Malmö-based Pale Blue Dot now feel is too narrow and has taken on too much political baggage – they will instead focus on investments which ‘optimise’, ‘adapt’ and ‘pioneer’.

This is just the latest position taken around a debate that’s been long-simmering in the impact sector. The discussion is basically over which label is the most effective for grouping together the myriad disparate efforts to finance the environmental transition, and indeed whether it matters.

This debate cannot be separated from the broader political landscape, wherein there is a widespread perception of ‘backlash’ against progressive climate policies, not to mention DEI (diversity, equity and inclusion) efforts.

Amid this context, some in the climate financing space seem to think 'climate' is too loaded with political connotation to be useful. At the same time, others think the term is too restrictive, or not forward-looking enough. Clean-tech and resilience-tech too have been subjected to similar scrutiny.

Speaking about climate, water, biodiversity etcetera in siloes is too restricting in my opinion

An energised debate

This debate has played out largely on LinkedIn. Rokas Peciulaitis, a partner with Contrarian Ventures weighed in with his thoughts recently. When they started in 2017, he wrote in a now-viral post, the term ‘climate-tech’ wasn’t even a thing, and he now thinks debates about the "category name" for sustainability-focussed investments are pointless.

"No distractions, renamings, just hard work and patience with heads down," wrote Peciulaitis of his company's priorities. "Playing long-term games with long-term people with the power of compounding."

Bas van Beijeren, investment director with Carbon Equity, echoed the sentiment:

"At Carbon Equity, we have always believed in this space – not because of what it’s called, but because of the scale, impact, and returns it offers. And we're not alone."

That said, for some people committed to the environmental transition, Pale Blue Dot's comments about needing to go beyond the ‘climate’ label have struck a chord.

Speaking to Impact Loop, Aurore Falque-Pierrotin, a founder of the biodiversity analytics startup Darwin and herself a former impact investor, says that while she can see merit in ignoring the labels and just getting on with it, she does think Pale Blue Point are on to something.

"I think they are spot-on underlining that climate as a term is too narrow,” says Falque-Pierrotin.

Darwin have just updated their website with a section outlining how they choose to view climate, biodiversity and related issues as a ‘nexus’ rather than a single problem, following the stance of the latest report from the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services.

"Speaking about climate, water, biodiversity etcetera in siloes is too restricting in my opinion and scientifically irrelevant as all of those terms are deeply interconnected," says Falque-Pierrotin.

Looking past the words

Rounding out the debate is an in-depth post written earlier this month by Planet A Ventures’ Jessica Burley. Despite the headline, ‘Climate tech is dead. Long live green tech!’, the post goes well past the semantics and attacks the underlying premise of a lot of this: that there is a global rollback in the fight against climate change.

Burley, marshalling considerable research and evidence, attacks head-on a number of the "myths" floating around, for instance that renewables rollouts are on the decline and green-tech is not viable without state intervention, that global political turmoil is going to kill the movement, or that Europe is turning away from the climate movement.

Her conclusions strike an optimistic tone amid an otherwise gloomy discourse.

"Whatever you call it, get excited, because this space is only just getting started," wrote Burley.

While the last few years have seen some declines in funding for certain areas of impact investing in Europe, as well as in EV adoption, there have been some encouraging signs that back up her optimism.

Numbers for 2025 so far show an uptick in new EV sales, amid tightening EU emissions standards. At the same time, major new funds have been announced for environmental and social impact investing, including a $500 million fund (€484m) announced by Berlin-based Cherry Ventures, as well as a Spanish state-backed group of investments worth $278m (€270m).