The New York Stock Exchange (NYSE) and Intrinsic Exchange Group (IEG) collaborated to introduce Natural Asset Companies (NACs), an asset class aimed at turning ecosystems and related services into tradable financial assets. Conservationists, however, argue that NACS only benefit wealthy investment firms and could eventually lead to the privatization of public assets.
Federal Newswire reached out to Rep. Cory Bush (D.-Mo) for her opinion on NACs as a new asset class, but did not receive a response.
Rep. Cori Bush (D-Mo.) co-introduced the $1 trillion Green New Deal for Cities with Rep. Alexandria Ocasio-Cortez (D-NY) in 2021.
"Bush said the bill would fund efforts to improve clean drinking water infrastructure, remediate lead paint and mold, provide air quality monitors, prevent floods and more," St. Louis Public Radio reported at the time. The Green New Deal For Cities was supported by various environmental groups, including People’s Action, Labor Network for Sustainability, Climate Justice Alliance, Indigenous Environmental Network and the Gulf Coast Center for Law and Policy, according to the report.
According to a 2021 article by A. Grace in Climate Conscious magazine, NACs encompass various services that can be traded, including water purification, carbon sequestration, tourism, pollination, food production and soil fertility. Intrinsic Exchange Group (IEG), which co-developed the class with the New York Stock Exchange (NYSE), according to the article, asserts that the existing economic system's imbalance impedes the resolution of complex challenges like climate change, with positive externalities, such as valuable natural resources, failing to generate wealth while negative externalities, like pollution, burden the general public with costs. The introduction of NACs sought to provide incentives for businesses to support conservation efforts.
Grace explains that concerns emerged regarding the true intentions and beneficiaries of NACs. Some individuals worried that NACs might be a disguised mechanism that primarily benefits the wealthy while disregarding the plight of damaged landscapes, the article states. Critics highlight that investors, including corporate raiders and asset management firms, were likely to reap the greatest rewards from NACs. Environmental advocates were raising questions about the ownership of shared resources and the potential privatization of natural assets. Notably, prominent investors like the Rockefeller Foundation, Inter-American Development Bank, and Aberdare Ventures aligned themselves with NYSE and IEG, raising suspicions about their underlying motivations, Grace stated in the article.
Proponents argue that NACs can deliver advantages if implemented with genuine intent, according to Grace, who reported that IEG aimed to channel funds into sustainable enterprises, such as regenerative farms, to foster a healthier environment and transform the way farmers are remunerated. By incentivizing farmers for preserving wildlife habitats and adopting regenerative practices, small-scale farms can enhance profitability while also promoting biodiversity and mitigating soil degradation, the article reports. Moreover, proper restoration of soil and ecosystems holds promise in combating climate change, as soil serves as an effective carbon sink.
Grace noted in the article that the efficacy of NACs in achieving their intended goals and addressing environmental concerns was uncertain. It is imperative to closely monitor whether the financialization of nature leads to the privatization of commonly shared resources and whether it genuinely serves the interests of conservation and climate action, Grace reported. Only time will ascertain whether NACs prove to be a valuable tool that unites conservationists and large corporations, or if they exacerbate existing apprehensions regarding the exploitation of natural resources for financial gain, the article states.
Alexandra Spiliakos, in the 2019 article "Tragedy of the Commons: What it is and 5 Examples," wrote that the issue is “a situation in which individuals with access to a public resource (also called a common) act in their own interest and, in doing so, ultimately deplete the resource.” The tragedy of the commons theory explains how individuals prioritize their personal needs, even if it harms others, the article states. In situations where a common-pool resource, which lies between a public and private good, is at risk of overuse, individuals may prioritize their short-term interests, leading to unsustainable consumption and disregarding potential harm to the environment or the general public, according to the article.
Greg E. Welcher, in 2021's "What If Nature Were For Sale?" for the Heartland Institute, wrote skepticism and conspiracy theories rose around the intentions of NACs. Critics argued that Wall Street was seeking to capitalize on nature and assert control over natural assets.
The use of funds generated by NACs for conservation efforts is uncertain, as the focus shifts toward commodifying nature and allowing it to be bought and sold on the open market. While the concept of NACs may face resistance in regions where nature is not for sale, there are possibilities for investors in areas with available land. The success of NACs will depend on whether the promised conservation projects and sustainability goals are upheld once nature becomes a tradable commodity. Critics express concern about potential consequences, such as the monetization of clean water, clean air, and access to natural resources.
