Proposed Rule Change for Listing of Natural Asset Companies

The Securities and Exchange Commission is set to make a decision next year regarding a proposed rule change that could open up the listing of a new investment vehicle tied to the value of natural assets.

Natural Asset Companies

Focus on Conservation and Sustainability

One key aspect of these natural asset companies is their dedication to generating revenue without adversely affecting the natural assets in a significant manner. Unsustainable activities, like mining, would be strictly prohibited.

Utilizing Capital for Sustainable Practices

Capital raised through the initial public offering or follow-on offerings of a natural asset company would be utilized for conservation, restoration, sustainable management, as well as funding day-to-day operations. The objective is to maximize the area's ecological performance.

Pioneering the Concept

The concept of natural asset companies was first introduced by Intrinsic Exchange Group, a private company established in 2017 that provides guidance to public sector and private landowners. As part of a potential listing on the New York Stock Exchange, the company has agreed to exclusively license its reporting framework for natural asset companies.

The proposed rule change presents an opportunity for the listing of natural asset companies, enabling investments in sustainable practices and the responsible management of our natural resources.

Proposed Rule Change Could Have Implications for Federal Land Management

The Securities and Exchange Commission (SEC) has put forth a proposal aimed at addressing the "overconsumption of and underinvestment in nature." However, this proposal has faced opposition from Republicans, who express concerns about involving corporations in federal land management.

Republican Senators Jim Risch and Mike Crapo from Idaho, along with Senator Pete Ricketts of Nebraska, wrote a letter to the SEC voicing their reservations. They argue that this approach may lead to a preservationist-only strategy, rather than the intended "all-of-the-above" working lands approach set by federal land programs.

In mid-December, a group of 32 Republican members of the House of Representatives also sent a letter to the SEC, requesting an extension on the comment period and the deadline for a decision on the proposal. Their concern is that the rule change could potentially allow foreign buyers, including unfriendly regimes, to acquire access and ownership of U.S. lands.

The SEC has responded to these concerns by initiating proceedings to evaluate the proposed rule change. Seeking further input on the matter, the agency aims to gather additional commentary before reaching a decision.