This week, the Securities and Exchange Commission (SEC) will close comments on its proposed rule to list Natural Asset Companies (NACs) on the New York Stock Exchange (NYSE).
The original rule was published October 4th with little publicity – as the agency wanted – and quietly solicited comments until October 25th. State financial officers like Marlo Oaks, Utah’s 26th Treasurer, found this abrupt closure unsettling and promptly fought back. Ultimately, their efforts – in conjunction with American Stewards of Liberty, Rep. Harriet Hagemen (R-WY), and Senator Pete Ricketts (R-NE) – forced the SEC to reconsider their decision and reopen comments on December 28th, 2023. January 18th is the last day to submit comments against the rule.
A NAC, as I’ve extensively noted here at Townhall.com, is considered a new kind of Environmental, Social, and Governance (ESG) investment and “sustainable revenue-generating enterprises.” The SEC rule argues they’ll end “the overconsumption of and underinvestment in nature requires bringing natural assets into the financial mainstream.” If approved, these will be corporations owning rights to ecological performance (i.e. natural assets) and license rights to minerals, water, or air from “sovereign nations or private landowners.”
And how would these so-called sustainable enterprises achieve profitability in the SEC’s eyes? NACs would – get this – “monetize ecosystem services that have markets” by allowing carbon credits to “conduct sustainable revenue-generation operations.”
Carbon credits and related offsetting, mind you, isn’t doing so hot these days. Last fall, Reuters reported there’s little confidence in voluntary carbon markets now following carbon offset firm, South Pole, was caught selling “environmentally worthless credits, while the developer of its biggest project [Kariba] secretly moved tens of millions of $ paid by Gucci, Porsche, Nestlé & others into offshore accounts.”
Unsurprisingly, the SEC can’t create these so-called “sustainable” enterprises to oversee ecosystem services and own rights to natural assets on private and public lands since it’s outside their jurisdiction. And Treasurer Oaks, who’s been serving in his position since July 2021, told me NACs aren’t “based on economic activity” but on “natural processes” in what he deemed “financializing Mother Nature.”
“When you move into areas that are not economically based, like what is the value of photosynthesis, for example, our accounting standards are inadequate,” Oaks argued. “That's why the New York Stock Exchange had to go to the Securities and Exchange Commission to get a rule that would allow them to list this kind of company.”
Treasurer Oakes said the SEC is relying on a new type of accounting system derived from the United Nations’ System of Environmental-Economic Accounting—Ecosystem Accounting (SEEA EA) that is, in his view, arbitrary in nature.
“They're assigning arbitrary value to natural processes that happen and really make life on Earth possible,” he continued. “The whole goal is to reduce human impact on land. There is definitely a push to get motorized vehicles off of federal lands [and] to prevent kinds of traditional outdoor activity – hunting and fishing, in particular – from happening.”
Treasurer Oaks recommends concerned Americans urgently voice their concerns directly with the NYSE and “tell them to pull back their proposal to the SEC.”
“The New York Stock Exchange should not be doing this. It's clearly anti-free market,” added Oaks.
Opposition to the NAC rule has ramped up ahead of tomorrow’s deadline.
25 attorneys generals – led by Utah Attorney General Sean Reyes – sent the SEC a letter opposing the efforts, stating: “Of all the objectionable and extreme policies in the ESG menagerie, NACs are among the most egregious and least defensible legally. NACs rely on unproven models focused not on returns and value for investors but rather restrictions of legal and productive use of natural resources, with dollars deployed in amorphous and undefined categories such as “natural assets” and “ecosystem services.” While masquerading as a novel tool for the public good, NACs are a brutish vehicle to accomplish an activist political agenda. They deprive public use of land in multiple ways that will further jeopardize U.S. energy independence and grid stability while illegally opening management, use and ownership of these lands to private parties, including hostile countries or entities.”
On January 11th, the House Natural Resources Committee Subcommittee initiated a probe into the proposed rule, writing, “The Committee is deeply concerned with the potential impact NACs may have on the management of federal lands, effective conservation of wildlife habitat, and responsible development of natural resources. Most notably, the proposed rule would allow private investment interests to control and manage national parks and other publicly owned lands — an unprecedented power-grab and usurpation of federal authority.”
Concerned about safeguarding property rights and maintaining public lands access? Learn more about the SEC NAC rule here.