The New York Stock Exchange and Intrinsic Exchange Group (IEG) are working together to develop a new class of publicly traded assets called Natural Asset Companies, or NACs.
NACs are sustainable enterprises that hold the rights to ecosystem services produced by natural, working or hybrid lands. Natural assets produce about $125 trillion annually in ecosystem services, such as carbon sequestration, biodiversity, and clean water. This significant economic output underscores the financial potential of an asset class that is wholly based on environmental investment.
“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,” Douglas Eger, CEO of IEG, said. “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.”
IEG has developed an accounting framework, in consultation with former Financial Accounting Standards Board (FASB) Chairman Robert Herz and leading accounting firms, to measure ecological performance to complement GAAP financial statements.
The NYSE will seek SEC approval for unique listing requirements tailored to NACs and incorporating IEG’s accounting methodology. IEG and the NYSE would then begin working with the first NACs to help prepare them for listing and trading as publicly held entities on the NYSE.
“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,” Stacey Cunningham, president of NYSE Group, said.
IEG is currently advising a number of sovereign nations on the potential creation of NACs. IEG and the Inter-American Development Bank (IDB) are working with the Government of Costa Rica to lay the foundation for NACs that would preserve and grow natural assets throughout the country. In the private sector, IEG anticipates announcing its first partnership later this fall in collaboration with a multinational corporation.
“In addition to GAAP financial statements, we believe it is absolutely critical to provide investors in Natural Asset Companies with relevant, reliable and understandable information on the flows of the ecosystem services they produce and their stocks of natural capital assets,” Herz, the former chairman of FASB, said.
IEG has received initial funding from IDB Lab and IDB, The Rockefeller Foundation, Aberdare Ventures and Entertaining Ideas.
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