NYSE develops asset class tied to sustainability amid ESG push

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The New York Stock Exchange is helping develop a new class of publicly traded assets tied to services that are beneficial to the environment, amid a boom in demand for sustainable investments.

NYSE has partnered with Intrinsic Exchange Group to create Natural Asset Companies, which hold the rights to “ecosystem services” provided by corporations such as biodiversity and clean water, the companies said in a statement. Investors will be able to access these rights by buying shares, helping corporations raise capital that they can then reinvest in environmentally beneficial ways.


Michael Nagle/Bloomberg

The goal is to unlock value from natural resources, which produce an estimated $125 trillion annually, the companies said in the statement. Under the partnership, IEG will provide reporting metrics that companies follow to help determine the value of the assets, which will then be listed on NYSE. The accounting framework will measure a company’s ecological performance in the same way a business provides balance sheet items such as cash flow and revenue as metrics.

“There is a real unmet desire today from foundations, family offices and increasingly more traditional institutions to be able to express their investment theme of protecting and preserving the environment and trying to ensure that the natural assets that underpin the rest of economic activity remain vital,” Michael Blaugrund, NYSE’s chief operating officer, said in an interview.

Investments with stated environmental, social and governance aims are an increasing area of focus for corporate America as companies and investors look to preserve natural resources across the globe amid mounting political pressure. Some metrics used in determining the investments have been criticized for being hard to quantify, and at times with scant penalty when targets fall short.

NYSE and IEG are advising sovereign nations, private landowners and public companies on forming natural assets that could be listed on the exchange. They’re working with Costa Rica’s government on ways to create and grow natural assets throughout the country, as well as a separate private partnership with a multinational corporation that the companies declined to disclose.

The companies are seeking SEC approval for the new asset class, which would follow their filing of listing standards with the regulator.

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