Pricing natural assets to preserve them

The NYSE wants to develop a new publicly traded asset class known as natural asset companies (NACs), which would aim to account for the economic value produced by natural assets, such as capturing carbon and preserving biodiversity.

The exchange announced that it’s developing listing requirements that will be tailored for the new vehicles — sustainable enterprises that hold the rights to the benefits produced by natural capital — and will seek approval to list them for trading from the U.S. Securities and Exchange Commission (SEC).

The NYSE estimated that natural assets produce US$125 trillion annually in “ecosystem services.” Those include carbon sequestration, biodiversity and clean water, and putting a value on those services is intended to help drive sustainable investment.

“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,” said Stacey Cunningham, president of NYSE Group, in a release.

The NYSE said that financial data firm Intrinsic Exchange Group (IEG) has “developed an accounting framework to measure ecological performance to complement GAAP financial statements.”

It added that IEG is working with the government of Costa Rica to develop the first NAC, with private-sector companies expected to follow.

The NYSE reported that it also has taken a minority ownership stake in IEG, and that it plans to license its accounting framework to support the development of the new asset class.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.