Feature Article

 

 

Natural Asset Companies: The Debate Continues in 2025

It is highly debated whether Natural Asset Companies (NACs) should be allowed in U.S. markets in 2025. A proposal to list NACs on the New York Stock Exchange (NYSE) was withdrawn in January 2024 following widespread opposition. While supporters promote NACs as an innovative tool for conservation finance, opponents raise significant concerns about their potential impact on property rights, land use, and national security. 

Background on the SEC proposal

In September 2023, the New York Stock Exchange (NYSE) filed a proposal with the U.S. Securities and Exchange Commission (SEC) to create a new type of listed company called a Natural Asset Company (NAC).

A NAC would be a corporation that holds the "rights to ecological performance," meaning it could manage, maintain, and restore natural assets like forests, wetlands, and farmlands. The company's value would be based on these natural assets and their production of "ecosystem services," such as clean air and water.

NACs would raise money by selling shares to investors and use the capital to finance conservation and restoration projects. They would also engage in sustainable, revenue-generating activities like ecotourism or selling carbon credits.

The proposal drew strong criticism and was ultimately withdrawn by the NYSE in January 2024 before the end of the public comment period. 

Arguments against allowing NACs

Threats to property rights: Opponents, including conservative lawmakers and property rights groups like American Stewards of Liberty, expressed concern that NACs could be used to put management restrictions on vast areas of public and private land.

Locking up resources: Critics argued NACs could prevent productive land uses such as farming, mining, and energy production, which would harm rural economies. Some likened it to a "fleecing" of property rights.

National security risks: With concerns over foreign entities potentially gaining ownership or control of U.S. lands through NACs, some raised national security concerns.

Ignoring human well-being: Some opponents claimed that the prioritization of ecological performance over other productive land uses would lead to worse outcomes for local communities.

Lack of tangible benefits: Some critics doubted whether NACs would provide genuine environmental benefits or simply serve as a mechanism for investors to profit from environmentalism.

Questionable accounting standards: The proposal's reliance on new accounting frameworks, based on the U.N. System of Environmental-Economic Accounting, was also met with skepticism. 

Arguments in favor of allowing NACs

Market-based conservation: Proponents, like the Intrinsic Exchange Group (the firm that co-created the NAC framework), contend that NACs are a scalable, market-based tool for financing conservation and rewarding good environmental stewardship.

Addressing underinvestment: Supporters argue that the traditional economy has long undervalued nature's services, leading to their degradation. NACs would address this by converting nature's value into financial capital, attracting private investment for its protection.

Supporting sustainable development and resilience

• Long-term management: A core function of a NAC is to manage a specific geographic area—whether a rainforest, wetland, or regenerative farmland—to maximize its ecological performance. This provides a mechanism for permanent and sustainable management, which can lead to increased resilience for both the environment and surrounding communities.

• Nature-based solutions: NACs facilitate investment in projects that provide clear environmental benefits, such as reforestation, improved water quality, and biodiversity protection. For example, proceeds from a NAC's initial public offering (IPO) can be used to fund a sustainable management plan for the underlying asset.

• Addressing ESG demands: Proponents argue that NACs represent a credible and scalable opportunity for investors seeking to make nature-positive investments that align with their Environmental, Social, and Governance (ESG) priorities. It provides a new financial tool to meet the increasing demand for sustainable investment opportunities.

Community involvement: The framework is designed to include a benefit-sharing component, which would ensure local communities with ties to the land are compensated and involved in the conservation efforts.

Misinformation claims: Intrinsic Exchange Group acknowledged that misinformation about NACs contributed to the backlash and argued that many concerns, such as the idea of locking up resources, were inaccurate. 

The current status in 2025

Following the backlash, the NYSE formally withdrew its proposal from the SEC in January 2024, preventing NACs from being listed on the public exchange for now.

The fight continues: Despite the withdrawal, proponents have vowed to press on, and some analysts believe elements of the proposal will resurface in other forms, such as "natural capital accounts".

While the public listing of NACs is off the table, the underlying goals—financing nature protection and restoration—are being pursued through other avenues. 

In the private sector:

• Specialized funds: Investment firms like Nuveen are offering private investment strategies focused on "Natural Capital". These can include investments in:

• Ecological enhancement projects: Smaller firms like Natural Asset Partners in the UK partner with landowners to design and implement ecological projects, such as creating habitat banks and improving soil health on farms.

• Corporate partnerships: Corporations like Diageo and Kellogg are collaborating with conservation groups like The Nature Conservancy to invest in projects that improve water security and promote regenerative agriculture.

• Next-generation solutions: Intrinsic Exchange Group (IEG), the firm that developed the NAC concept, is now focusing on a private market approach. They are working with natural asset owners, communities, and corporations to develop bespoke investment structures for financing conservation and restoration. 

At the global and policy level:

• Conferences and forums: Major events in 2025, like the Natural Capital Investment Americas conference and Net Zero Investor's Nature Positive Investment Forum, are exploring new financing tools for nature.

• Innovative finance instruments: Forums are discussing innovative mechanisms for nature finance, including:

• Natural capital valuation: Organizations like the Natural Capital Project at Stanford are working with multilateral development banks and countries to integrate natural capital valuation into policy and investment decisions. This includes projects around the world to value ecosystem services like water purification and coastal protection. 

• While still a nascent asset class, NACs are beginning to see some real-world application. For example, the World Economic Forum reports https://www.weforum.org/stories/2025/09/nature-finance-sustainable-investing-priority-models/ on the establishment of a boreal NAC by an indigenous-led corporation to safeguard heritage and foster sustainable growth on over a million acres of native-owned land.

• Other examples of companies and organizations working in the natural asset space include:

Local and state prohibitions: In the wake of the controversy, some states and advocacy groups, like the American Legislative Exchange Council (ALEC), have drafted legislation to prohibit NACs from operating within their borders. 

You can stop Natural Asset Companies (NACs) through legislative action, legal challenges, and rejection of related programs at the state, local, and private levels.

Pursue legislative and policy action

• Enact state-level prohibitions: Multiple states, including Utah, Nebraska, and Kansas, have passed legislation to block NACs from operating within their borders. The American Legislative Exchange Council (ALEC) has created model legislation, the "Natural Asset Company Prohibition Act," that states can adopt to:

• Target federal policies: Opponents of NACs can urge congressional representatives to cut funding for federal initiatives perceived as supporting the NAC model, such as the "30x30" conservation agenda. Legislative efforts can also challenge federal agencies, like the Bureau of Land Management (BLM), from prioritizing conservation leases on public lands over other uses.

• Reject accounting frameworks: Oppose initiatives that create new accounting methods for natural assets, like the "natural capital accounts" strategy, which some see as a way to reintroduce the NAC concept under a different name. 

Mount legal and regulatory opposition

• Challenge regulatory rules: Public opposition can influence the withdrawal of proposed rules, as was the case with the SEC proposal for NACs on the NYSE. Individuals and organizations can submit comments during public comment periods to voice objections.

• File lawsuits: Legal challenges can be brought against companies or government agencies concerning nature-related financial risks or alleged misrepresentations of environmental impact. This includes litigation based on human rights law, which argues that climate change and environmental degradation caused by corporate actions violate human rights. 

Take action at the local and private level

• Reject government incentives: Private landowners can refuse to accept government incentives, such as conservation easements, which would encumber their property with federal regulations. Landowners can also advocate for better tax incentives for multi-generational ownership instead of one-time benefits.

• Limit conservation easements: Local governments and land trusts can cap the total percentage of conservation easements in a county to protect the local tax revenue from being eroded. Landowners can also include provisions in easement contracts to prevent them from being transferred to NAC-like financial products.

• Raise public awareness: Raising public awareness about the potential impacts of NACs on property rights, land use, and local economies can help mobilize opposition. Sharing information through local groups, media, and community meetings can help challenge the narrative behind NACs. 

The debate over NACs continues to be a live issue, and any future attempts to introduce similar investment vehicles would face similar intense scrutiny and opposition. Their future development will depend on addressing the criticisms raised and establishing clearer frameworks for their operation and regulation.