The New York Stock Exchange (NYSE) has proposed new listing standards for a category of public companies called "Natural Asset Companies" (NACs). These companies have a primary focus on managing, maintaining, restoring and enhancing the value of natural assets and ecosystem services and are also encouraged to engage in sustainable revenue-generating activities and activities that support community well-being, provided they are sustainable.
The NYSE aims to address the underrepresentation of the value of nature in the financial system, which has led to the degradation of ecosystem services. Economists estimate the value of these services at over $100 trillion annually, according to the Securities and Exchange Commission (SEC). NACs would be corporations that hold rights to ecological performance produced by natural areas and have the authority to manage them for conservation, restoration or sustainable purposes. Capital raised by NACs through IPOs or follow-on offerings must be used for ecological purposes or sustainable operations, such as eco-tourism or regenerative agriculture.
NACs would report their financials under Generally Accepted Accounting Principles (GAAP) and disclose material information about their licenses with natural asset owners. They would be subject to listing standards and required to publish Ecological Performance Reports, providing information on the biophysical measures, conditions and economic value of ecosystem services they produce. Independent public accounting firms would examine and attest to these reports, according to the Securities and Exchange Commission.
The NYSE's proposal aims to bridge the gap in financing for transitioning to a sustainable economy by bringing natural assets into the financial mainstream. Whether this proposal will be a game-changer for the environment or merely a symbolic effort remains to be seen, JD Supra said, as it is open for public comment for 21 days.
According to American Stewards of Liberty, the U.S. Fish and Wildlife Service announced a plan on Sept. 20 to create a massive 5.8 million-acre conservation area in Southwest Montana, covering 9,000 square miles. If the proposal is approved, the conservation area would qualify as a “Hybrid Area” for the purpose of creating an NAC.
A Hybrid Area is characterized as a "conservation area," as per the Intrinsic Exchange Group's (IEG) website, and it represents an interconnected ecosystem comprising government-owned lands, private properties and sustainable communities, according to American Stewards of Liberty. IEG is the organization collaborating with the New York Stock Exchange to develop this new investment vehicle. This initiative enables international investors like BlackRock and countries with control over critical mineral supplies, notably China, to acquire a stake in the conservation area and benefit from the anticipated financial returns.
