In a move that has caught the attention of some lawmakers and property rights advocates, the Securities and Exchange Commission (SEC) recently proposed a rule approving the creation of a new investment vehicle known as the Natural Asset Company (NAC).
Championed by the Intrinsic Exchange Group (IEG) in collaboration with the New York Stock Exchange (NYSE), the initiative aims to list companies with missions to improve ecosystems through the management, maintenance, or restoration of public or privately owned lands. The IEG, founded by the Rockefeller Foundation and supported by international environmental organizations such as the World Wildlife Fund, claims that the NAC would create a $5,000 trillion economy by quantifying and monetizing “natural processes” and “ecosystem services.”
However, critics argue that this proposal will threaten human well-being, independence, and the principles enshrined in the U.S. Constitution.
Of particular concern is that approximately 86 percent of Nevada remains federally held.
Nevada Governor Joe Lombardo expressed his apprehension in a letter to the SEC, stating, “This rule has wide-ranging implications for the citizens of our states, specifically in our natural resources and agricultural industries.”
The core idea behind NACs is to grant corporations “ecological performance rights” rather than traditional leases for extractive activities. These rights are valued based on carbon storage, sequestration, and the more subjective “sensory benefits.” Critics fear that this approach could pave the way for privatization of national parks and protected lands, raising questions about the potential misuse of public resources.
To qualify as a natural asset company, corporations would need to document improvements in the land they manage, committing to goals such as wildlife habitat enhancement and ensuring clean air. However, the proposal’s broad scope and 38 categories of potential improvements have sparked concerns about the potential overreach of private entities into public land management.
One concern is the potential for foreign entities to invest in NACs and gain control over U.S. public lands. Lawmakers and governors have raised alarms about the implications of this rule, suggesting that it could be a backdoor approach to implementing Environmental, Social, and Governance (ESG) principles on land use and management. While proponents argue that NACs would provide investors with an avenue for preserving nature, critics question the viability of such investments, arguing the restrictions imposed on NACs, prohibiting unsustainable extractive activities, could hinder their profitability and result in significant expenses for environmental statements and audits.
The SEC’s proposed rule defines NACs as corporations holding rights to the ecological performance of designated areas, with management authority over conservation, restoration, or sustainable management. It has led to concerns about the constitutional implications of private investment companies having management authority over federal lands, a responsibility historically exclusive to Congress and land management agencies.
As the Biden administration expresses interest in valuing “natural capital” and its contribution to the economy, critics view the NAC proposal as a step toward consolidating political and financial control over natural resources. The proposed rule aligns with international efforts to establish a system for accounting natural assets, with potential implications for the national debt, taxation, and the creation of a new investment product.
As the debate unfolds, the proposed SEC rule has ignited a broader discussion about the balance between environmental conservation, private investment, and the protection of property rights and national sovereignty. Critics argue that the potential risks of NACs outweigh the claimed benefits, emphasizing the need for careful consideration and public discourse on this significant proposal.
The SEC plans to rule on the question of Natural Asset Companies on Tuesday, January 2, a day before the U.S. Congress is to reconvene following winter recess.
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