Sustainable Living & Sustainable Lifestyle

Natural Asset Companies (NAC) will allow the value of nature and ecosystem services to convert into financial assets exchanged on the stock market.

What Are Natural Asset Companies?

Natural Asset Companies (NAC) will allow the value of nature and ecosystem services to convert into financial assets exchanged on the stock market.

The New York Stock Exchange recently announced a new asset class that focuses on the preservation and restoration of natural assets that “underpin the ability for there to be life on Earth.” An accompanying listing vehicle will allow these natural asset companies (NAC) to trade on the exchange.

An NAC will hold the rights to ecosystem services on a specific area of land. For example, these services could include carbon sequestration, provision of clean water and biodiversity efforts. The goal behind creation of NAC is to develop an asset class that converts the value of nature and the ecoservices designed to sustain it into financial capital.

For investors, it offers a chance to put money into services that support sustainability. If successful, it could become a vehicle for those who look at a company’s ESG efforts before making an investment.

The Creation of Natural Asset Companies

The New York Stock Exchange (NYSE) developed the assets with Intrinsic Exchange Group (IEG), which has founding investors that include Inter-American Development Bank and the Rockefeller Foundation. NYSE also has a minority stake in IEG.

NYSE and IEG developed the asset class to allow for investment in resources that “power a sustainable future,” according to ESG Today. The new asset class will give investors exposure to an estimated $125 trillion annual global ecosystem services market.

Douglas Eger, CEO of IEG, said that the new asset class will “create a virtuous cycle of investment in nature that will help finance sustainable development for communities, companies and countries.”

IEG has developed an accounting system that will enable investors to properly value the ecosystem services provided by NACs. This system will measure ecological performance of the NAC.

Creating a NAC involves first identifying a natural asset, such as a lake or forest, quantified by established protocols developed by companies such as Capitals Coalition. A NAC is then created, with a company structure that determines who has rights to the asset’s productivity, as well as control over how it is managed and governed. The NAC is launched on the market with an initial public offering, generating money to manage the natural asset. Price fluctuations occur based on the value of the NAC’s natural capital.

What Can You Invest In Through A NAC?

A NAC allows investors to financially back services that directly benefit the planet. Many of these are nature-based solutions that involve sustainable planning, design, environmental management and engineering practices. Together, they promote adaptation and resilience in the environment.

The Federal Emergency Management Agency defines these nature-based solutions as those that focus on:

  • Climate change
  • Flood risk
  • Water quality
  • Protecting coastal property
  • Restoring and protecting wetlands
  • Stabilizing shorelines
  • Reducing urban heat
  • Adding recreational space

Nature-based solutions often offer an effective approach to sustainability challenges, but at a lower cost than building traditional infrastructure. They also offer traditional economic benefits, including jobs, increased property values, improved public health and overall economic growth.

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