The New York Stock Exchange said on Tuesday it was co-developing a new tradeable asset class based on sustainable enterprises that hold the rights to ecosystem services, such as carbon sequestration, produced by natural, working, or hybrid lands.
The NYSE, which is owned by Intercontinental Exchange Inc , said "natural asset companies" (NACs) will be listed and traded on its exchange, "creating a new market whose assets generate trillions of dollars in ecosystem services annually."
Globally, natural assets produce around $125 trillion annually in ecosystem services, like water purification and biodiversity, the NYSE said.
"With the introduction of Natural Asset Companies, the NYSE will provide investors an innovative mechanism to financially support the sustainability initiatives they deem critical to our future," said NYSE President Stacey Cunningham.
Investments focused on environmental, social and governance factors have been in demand, with the assets of ESG-related funds rising 12% to $2.3 trillion from the end of March to late July, according to Morningstar.
The NYSE said it was developing NACs with the Intrinsic Exchange Group (IEG), which pioneered the idea and works with natural asset owners to form and list NACs to convert natural wealth into financial wealth.
"This wealth is based on healthy ecosystems and nature's production of vital ecosystem services, rather than on extractive measures, e.g., mining, timber harvest, etc," IEG said on its website.
IEG, with the Inter-American Development Bank (IDB), is currently working with Costa Rica's government on forming NACs, and said it is also in discussions with other sovereign nations, private landowners, and public companies.
IEG said it expects to announce its first private sector partnership with an unnamed multinational corporation this fall.
The NYSE said it is a minority investor in IEG, which has also received funding from IDB, The Rockefeller Foundation and Aberdare Ventures.
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