A coalition of state financial officers from 22 states are challenging the Securities and Exchange Commission (SEC)’s proposed rule to list natural asset companies (NACs) on the New York Stock Exchange (NYSE). 

In a letter to SEC Chair Gary Gensler, the state financial officers—led by Utah State Treasurer Marlo Oakes, wrote to the agency urging it to reopen the comment period on the rule to list NACs on the New York Stock Exchange. The rule was published on October 4th but closed comments on October 25th. The letter asks the SEC to reopen the comment period and extend the deadline another 60 days.  

“The SEC’s proposed rule creating natural asset companies will not only upend the accepted standards of value by which businesses are judged, it would pave the way for ESG fanatics to remake the American landscape. NACs would lock away vital resources that have underwritten America’s prosperity, sacrificing them on the altar of climate alarmism,” Derek Kreifels, the CEO of the State Financial Officers Foundation, said in a statement to FOX Business.

In 2021, NACs were introduced as a new type of Environmental, Social, and Governance (ESG) investment. They are a joint venture between Intrinsic Exchange Group (IEG) and NYSE, which owns a minority stake in IEG.

The proposed rule says these “sustainable enterprises” will end overconsumption and underinvestment in nature by “bringing natural assets into the financial mainstream.”

NACs will be corporations that hold rights to ecological services produced by working, natural, or hybrid lands and have these rights—mineral, water, or air rights—licensed by “sovereign nations or private landowners.” NACs, as it’s to be understood, could license these rights to nations like China or financial asset managers like BlackRock.

Not only would private lands be enrolled in NACs, federal lands like National Parks would also be managed under these “sustainable enterprises” as well. I recently noted this at IWF/RealClear Markets:

If the rule is approved, the SEC is expected to enroll federal lands—including National Park, U.S. Forest Service (USFS), Bureau of Land Management (BLM), and U.S. Fish and Wildlife (USFWS) lands—that fall under IEG’s hybrid land use case. These so-called “conservation areas” would encompass millions of acres of land, including working or recreational lands, that would be off-limits to multiple uses and recreational activities. This is currently playing out in Montana and Wyoming.

In Montana, the Fish and Wildlife Service has proposed the “Missouri Headwaters Conservation Area” that would consist of 5.8 million acres—3.7 million is public while 2.05 million is private—without consulting the state of Montana. Attorney General Austin Knudsen argues this is in violation of the Federal Advisory Committee Act (FACA).

More concerning is how these “sustainable enterprises” will achieve profitability. If you dig deeper into the proposed rule, its drafters say NACs will monetize ecosystem services with markets by selling carbon credits to “conduct sustainable revenue-generation operations.” As IWF has reported, carbon credits and carbon offsetting programs perpetuate environmental problems and are merely gestures of virtue signaling. One major investigation into a carbon offset firm found 94% of rainforest credits sold were “phantom credits” that actually, ironically, worsened carbon emissions.

ESG is losing its luster and this workaround, whose impact is more difficult to track, is equally being challenged