NYSE and Intrinsic Exchange Group partner to launch Natural Asset Companies
The New York Stock Exchange (NYSE), part of Intercontinental Exchange, and Intrinsic Exchange Group (IEG), are jointly developing 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.
On a global basis, natural assets produce an estimated USD125 trillion annually in ecosystem services, such as carbon sequestration, biodiversity, and clean water. The formidable 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,” says Douglas Eger, CEO of IEG. “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.”
Because the value created by NACs is not fully captured by traditional economic metrics, IEG has developed an accounting framework to measure ecological performance to complement GAAP financial statements. Developed in consultation with former FASB Chairman Robert Herz and leading accounting firms, IEG’s framework enables investors to value the ecosystem services generated by NACs.
In addition, the NYSE will develop and 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 will provide investors an innovative mechanism to financially support the sustainability initiatives they deem critical to our future. Our partnership 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,” says Stacey Cunningham, President of NYSE Group.
IEG is currently advising a number of sovereign nations, private landowners and public companies 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.
IEG has received initial funding from IDB Lab and IDB, The Rockefeller Foundation, Aberdare Ventures and Entertaining Ideas. IDB was an early supporter of IEG’s vision and helped it identify and develop projects in countries throughout South America. IDB’s extensive network of relationships and long engagement in both regional and global sustainability efforts position it as an important key partner to IEG.
The NYSE has taken a minority stake in IEG and will license its accounting framework to support the development of the new asset class. The transaction will not be material to ICE’s earnings or have an impact on capital allocation plans.