The New York Stock Exchange is putting America at risk. By advocating for a proposed rule change to create Natural Asset Companies (NACs), the NYSE is complicit in inflicting an economically destructive threat on the American economy. If the rule change is enacted, NACs would be listed for public investment on the exchange.
The NYSE was presented with a Trojan horse it may not have recognized. No one’s perfect. Thankfully, it is not too late for them to withdraw their request for the Securities and Exchange Commission (SEC) rule change. They should not wait.
It is hard to imagine a more contradictory or destructive proposal. Cloaked under the guise of free market capitalism, complete with the backing of one of its most revered institutions (the NYSE), NACs would lock up America’s natural resources. Private entities, including sovereign wealth funds controlled by hostile foreign countries, could use NAC investments to either acquire or manage private and public lands. National parks, state parks, federal land, and private property could all be locked up including property encumbered with conservation easements.
Once the NAC Trojan horse enters the market and fills itself with capital, that money would be turned loose to find land to manage exclusively for sustainability. This means finding property rich in natural resources and permanently preventing critical economic activities, like mineral extraction, grazing, and modern agriculture. Does the NYSE care about the destruction this would unleash on the country?
We are all dependent on natural resources from public and private land. Companies are, too. As a result, the NYSE also stands to lose should the rule gain approval. NACs will cannibalize or harm other NYSE-listed companies dependent on the same natural resources they seek to lock away. It’s contradictory and destructive, to say nothing of the reputational harm this proposal will surely extract.
On the periphery, the NYSE may want to reconsider its relationship with the proponent behind this terrible idea, the Intrinsic Exchange Group (IEG). It’s one thing to float an idea. It’s another to partner with and hold economic interest in an entity whose product harms its other customers, our country, and the free market system in which the NYSE plays so prominent a role.
While the rule change may seem like a function of the free market, it is not. NACs could not exist without a new accounting system because they do not offer a product or service that generates traditional economic activity. Rather (and this is why this system isn’t used in the United States) it is based on United Nations standards of assigning completely arbitrary value to natural processes. For example, photosynthesis that produces clean air is not a process for which we as human beings should have to pay.
Once someone is allowed to value and own a natural process, it can be sold to the highest bidder, whose cost will be recouped at the expense of Americans. NACs will drain economic resources in the name of fighting climate change and biodiversity erosion. In fact, IEG claims the shortfall to address these issues is on the order of $5.6 trillion annually.
It remains to be seen in what form those costs will take. Will regulation or shareholder activism force companies to offset their carbon emissions (a liability) with NAC investments (the offsetting asset)? Will individuals receive a new Mother Nature carbon invoice, payable to NACs, for consuming resources generated from natural processes? Regardless, $5.6 trillion represents about 25% of annual GDP, or $68,000 annually for a family of four. That is a significant drag on economic activity if the NYSE pushes ahead with its plans.
What isn’t often said is the real reason for climate hysteria. As a Huffington Post headline so succinctly concluded from a 2018 United Nations-commissioned study, “We cannot Fight Climate Change with Capitalism.”
The NYSE needs to decide if it will remain true to its storied history. Will it champion the economic system it helped propel into the greatest source of poverty elimination and innovation ever, or throw in its lot with the United Nations and those who would seek to destroy the foundations of economic freedom? I hope this helps clarify which path would be best.
The SEC public comment period closes January 18, after which a two-week rebuttal period allows anyone to rebut comments submitted.
Marlo Oaks is the State Treasurer of Utah
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