As director of Environmental Finance at Quantified Ventures, Carolyn duPont is helping companies channel private capital into social and environmental projects for a more sustainable future. Carolyn and her team focus on Environmental Impact Bonds, in which private investors provide capital for innovative environmental projects, and are repaid -- usually by a public sector entity -- depending on how well those projects perform.
“We pioneered this model with DC Water in 2016,” says Carolyn, “for a $25M issuance that brought capital from Goldman Sachs and Calvert Impact Capital to green infrastructure projects in Washington, D.C.”
DC Water wanted to invest in green infrastructure to meet EPA storm water management requirements, but it was uncertain as to how the green infrastructure projects would perform. The Quantified Ventures team helped DC Water share risk with private investors. If the projects don't perform as well as expected over a 5-year period, then DC Water recoups most of the interest payments it will have made to the investors. If they over-perform, DC Water will provide a reciprocal payment to the investors —which they'll be willing to do because they will have learned that green infrastructure is significantly more effective than they thought, and therefore they won't have to invest in as much acreage in the future—meaning they will benefit from significantly lower capital expenditures in the years ahead.
Quantified Ventures is applying this general "pay for success" model to other areas, including coastal resilience, agriculture and water quality, and even recreation infrastructure projects.
"It's been amazing to be part of trying to build a new financial mechanism and to help assign actual financial value to ecosystem services,”says Carolyn, who holds a dual MBA/MPA from MIT Sloan and Harvard’s Kennedy School.
Looking ahead, she is most passionate about applying this model to resilience investing, which is an area that she studied and published on while at Sloan. Also at Sloan, Carolyn was president of Net Impact, did fundraising for the Sustainability Summit, where she was exposed to a wide range of sustainability oriented companies, and was active in launching the now vibrant impact investing community at MIT Sloan. Carolyn earned Sloan Social Impact Fellowships and a Sustainability Certificate.
The United States and almost every country faces significant investment needs to adapt to climate change effects,” Carolyn says, “and there's no one easy solution for how to make those investments, and who's going to pay for them. It's been amazing to see the work that I did while at Sloan come to life and be so relevant—it's almost hard for me to believe my job is doing exactly what I had envisioned while in grad school. It took me a year to get there, since the first job I took post-Sloan was in clean tech venture capital, and it's been a fantastic experience since then.