A new asset class: NYSE seeks SEC approval to list NACs
NACs are sustainable enterprises that hold the rights to ecosystem services produced by natural, working, or hybrid lands.
The New York Stock Exchange (NYSE) and Intrinsic Exchange Group (IEG) are jointly developing a new class of publicly traded assets called Natural Asset Companies, or NACs.
The new asset class will be listed and traded on the NYSE, creating a new market whose assets generate trillions of dollars in ecosystem services annually.
With natural assets producing an estimated $125 trillion annually in ecosystem services, such as carbon sequestration, biodiversity, and clean water, NYSE and IEG found the financial potential of an asset class that is wholly based on environmental investment.
Douglas Eger, Chief Executive Officer of IEG, said: “This new asset class on the NYSE will create a virtuous cycle of investment in nature that will help finance sustainable development for communities, companies and countries. Together, IEG and the NYSE will enable investors to access nature’s store of wealth and transform our industrial economy into one that is more equitable.”
Stacey Cunningham, President of NYSE Group, said: “With the introduction of Natural Asset Companies, the NYSE plans to provide investors an innovative mechanism to financially support the sustainability initiatives they deem critical to our future. Our work with Intrinsic Exchange Group is another example of the NYSE tapping into our community to drive meaningful progress on ESG issues with a solutions-based approach.”
NACs are not fully captured by traditional economic metrics, which led IEG to develop an accounting framework to measure ecological performance to complement GAAP financial statements. In its turn, the NYSE will seek SEC approval for unique listing requirements tailored to NACs and incorporating IEG’s accounting methodology.
The next step would be working with the first NACs to help prepare them for listing and trading as publicly held entities on the NYSE.
And that’s where the government of Costa Rica enters the stage. The country’s authorities are working with IEG to develop the first NAC in order to preserve and grow natural assets throughout the country.
IEG is currently advising a number of sovereign nations, private landowners, and public companies on the potential creation of NACs.
The firm is also anticipating announcing its first private sector partnership later this fall in collaboration with a multinational corporation.
IEG is backed by IDB Lab, IDB, The Rockefeller Foundation, Aberdare Ventures, and Entertaining Ideas. The NYSE has taken a minority stake in IEG and plans to license its accounting framework to support the development of the new asset class.
Dr. Rajiv J. Shah, President of The Rockefeller Foundation, said: “Climate change is an existential threat, one that demands all of us to urgently consider every opportunity to mobilize resources to protect vulnerable ecosystems and communities and fight for the future of billions of people around the world. This is why we are proud to have been an early supporter of IEG’s approach to identifying new and sustainable ways for countries to safeguard their lands and waterways while creating a market to preserve natural assets.”
Andrea Meza Murillo, Minister of Environment and Energy, Costa Rica, commented: “In Costa Rica, IEG is supporting us to build a pilot project for establishing a Natural Asset Company. This will deepen the economic analysis of giving nature its economic value, as well as to continue mobilizing financial flows to conservation. All of this, in a key moment when we have to meet social and economic needs on our people and comply with what science tells us about the 30×30 goal, on protecting at least 30 percent of land and oceans by 2030.”