HOW NACs WORK
Natural Asset Companies harness market forces to conserve, restore, and grow natural capital, promote resilience, and offer a compelling investment opportunity.
A NEW KIND OF COMPANY
Natural Asset Companies, or NACs, do something that has never been done before: incorporate the full value of everything that nature does into a new type of company that has a management team, investors, a board, and a purpose — to maximize the ecological performance of the geographical area under its management.
NACs are a direct, nature-positive investment into resilience, climate, biodiversity, and improved social outcomes. NACs are designed to generate financial returns and broader benefits for natural asset owners, investors, communities, and corporate supply chains.
NACs are corporations that hold the rights to the value of natural assets and the ecosystem services they produce
Each NAC manages a specific land area and grows the value of the natural assets under management
NACs are equities that incorporate the value of the nature and ecosystem services as well as traditional cash flows consistent with their charter
STRUCTURE FOR DIRECT INVESTMENT IN NATURE
Natural Asset Companies are a pure-play investment vehicle for financing the conservation, restoration, and growth of natural assets under management. Ecological rights are the foundational asset of a NAC. The growth of those natural assets, including the quality and value of ecosystem services produced, translates to financial growth for the company and its shareholders.
NACs ARE DESIGNED TO MEET ALL THE CRITERIA NEEDED FOR A SCALABLE INSTRUMENT FOR NATURE INVESTMENT.
Incorporates the total economic value of nature
Offers a market rate of return on investment, based on the asset itself
Creates an incentive and means for permanent management of the assets
Establishes a property right in nature’s value, granting asset owners and investors a legal claim
Complements existing nature finance instruments such as carbon and biodiversity credits
Provides a systematic accounting of value that is transparent, reproducible, and acceptable to all stakeholders
FROM NATURAL CAPITAL TO FINANCIAL CAPITAL
Under a NAC’s equity structure, natural asset value is converted into share capital. The buying and selling of shares in a NAC, in a private or public market, then converts share capital to financial capital.
NAC ACCOUNTING & REPORTING
To inform investors of the full value of a NAC and the natural assets under management, NAC reporting has two components.
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Goods and services produced by NACs that generate cash flows are accounted for under standard financial reporting: U.S. Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). This includes directly monetized revenues from carbon credits, biodiversity credits, water quality credits, or the sale of agricultural goods produced on working lands.
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The value of nature and its productivity that are currently beyond the scope of traditional financial reporting are captured in an Ecological Performance Report (EPR). The EPR systematically accounts for the value of nature historically left out of financial metrics. It provides consistent, transparent, and robust information about the condition of natural assets, their production of ecosystem services, and the economic value of the natural assets managed by the NAC. The EPR is prepared in accordance with Natural Capital Accounting Principles (NCAP), an independent standard for corporate reporting on natural capital developed under the stewardship of Fordham University’s Gabelli School of Business Responsible Business Center. NCAP builds on the UN’s widely accepted System of Environmental Economic Accounting (SEEA EA) framework. This framework is transparent, auditable, and easily replicated. Further, ongoing measurement, reporting, and validation is codified in the rules governing a NAC, creating a template for data collection and annual reporting of ecological performance.