The partners will be assisted by the International Council for Local Environmental Initiatives (ICLEI), an international association of local governments and national and regional local government organisations.
Microsoft will build new software tools using the knowledge base that ICLEI has acquired in developing its Harmonized Emissions Analysis Tool.
"The Clinton Foundation is committed to a business-oriented approach to the problem of climate change," said Bruce Lindsey, chief executive of the Clinton Foundation.
"This new software tool will be an important resource in our work with cities around the world to fight global warming in practical, measurable and significant ways."
Three-quarters of the world's greenhouse gas emissions come from cities, and 40 per cent of those emissions come from buildings.
Microsoft, together with a consortium of partners, will develop a single web solution to allow cities to clearly understand their environmental footprint.
With this information, cities can make better choices as they aim to improve energy efficiency and reduce carbon emissions.
The web-based software tools will be provided pro bono to cities and will be available by the end of the year.
The tools will help cities to collaborate in new ways via the web and online communities, enabling them to work together to monitor progress and share best practices.
They will be compatible with existing emissions reduction tools for cities, allowing the export and import of data from other systems.
Former US president Bill Clinton launched the Clinton Climate Initiative in August 2006 and announced a partnership with the C40 Large Cities Climate Leadership Group, a consortium of 40 of the world's largest cities committed to fighting global warming.
The online tools will provide cities with a baseline and standardised measurement of carbon emissions, as well as the ability to track the effectiveness of emission reduction programmes.
The completed measurement tools will consist of a multilingual, online and offline software service accessible around the world.
Microsoft will lead the technical software development, and will help establish a consortium of private sector partners that will support the cities in the creation and long-term sustainability of the project.
The Clinton Climate Initiative will direct the project and disseminate the new tool to cities that are taking action to curb carbon emissions around the world.
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