SEC Considering Rule Tieing Investment Value to Natural Assets
29 December 2023 - 5:37PM
Dow Jones News
By Dean Seal
The Securities and Exchange Commission is expected to decide
next year on a proposed rule change that would permit for the
listing of a new investment vehicle tied to the value of natural
assets.
So-called natural asset companies would hold the rights to the
ecological performance of natural or working areas, including
natural reserves or large-scale farmlands, according to the Sept.
29 proposal published in the Federal Register. They would also have
the authority to manage the areas for conservation, restoration or
sustainable management, and its rights could be licensed, likely
from sovereign nations or private landowners.
The entities would be tasked with generating revenue in a way
that wouldn't adversely affect the natural assets in a material
way, and therefore would be prohibited from conducting
unsustainable activities such as mining, the proposal said..
Capital raised through a natural asset company's initial public
offering or follow-on offerings would be used for conservation,
restoration or sustainable management, as well as funding
operations and otherwise maximizing the area's ecological
performance.
The concept was pioneered by Intrinsic Exchange Group, a private
company founded in 2017 that advises public sector and private
landowners. The company has agreed to exclusively license its
reporting framework for natural asset companies to the New York
Stock Exchange in connection with the potential listing.
According to the exchange's proposal, the rule change could help
end the "overconsumption of and underinvestment in nature."
The proposal has received push back from Republicans, including
Idaho Senators Jim Risch and Mike Crapo, and Sen. Pete Ricketts of
Nebraska. They said in a November letter to the agency that
involving corporations in controlling and stewarding federal lands
could "lead to a preservationist-only approach to federal land
management instead of an 'all-of-the-above' working lands approach
as intended by the creation of our federal land programs."
A group of 32 Republican members of the House of Representatives
sent their own letter to the SEC in mid-December, asking the agency
to reopen the comment period and extend its Jan. 2 decision
deadline on the proposal.
The lawmakers warned that the rule change could allow U.S. land
access and ownership to be auctioned off to "the highest foreign
bidder, including to hostile regimes that clearly do not have our
best interests at heart."
The SEC said on Dec. 21 that it has initiated proceedings to
determine whether or not the rule change should be approved and is
seeking additional commentary on the proposal before making a
decision.Tie
Write to Dean Seal at dean.seal@wsj.com
(END) Dow Jones Newswires
December 29, 2023 12:22 ET (17:22 GMT)
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