- Tuesday, January 16, 2024

People around the world are waking up to the anti-energy, anti-growth consequences of big-government policies advanced in the name of fighting climate change. So naturally, the climate lobby has produced yet another creative way to hide the ball.

The latest scheme comes from the Biden administration’s Securities and Exchange Commission in the form of a new investment vehicle for so-called green investing: natural asset companies, or NACs. As environmental, social and governance investing faces mounting pushback for sacrificing investor returns in favor of political aims, the SEC is proposing to allow this novel investment vehicle, which openly puts maximizing “ecological performance” over investor returns, to be publicly listed on the New York Stock Exchange.

This development should concern all Americans, including those who do not closely track the financial markets. NACs would operate by assigning monetary value to ecological processes such as “clean air, water supply, flood protection, productive soil for agriculture, climate stability, [and] habitat for wildlife, among others.” They would then buy the rights to control “ecosystem services” on public and private land.

NACs would be exempted from traditional performance standards and instead would be required to maximize these ecosystem services in line with “ecological and social goals.” Any secondary activity would be limited only to “sustainable revenue-generating operations,” such as ecotourism or carbon credit trading.

Americans must understand that NACs continue the Biden administration’s dangerous commitment to the ESG agenda, which promises a merger between capital, climate and social goals. Instead, it weaponizes the financial sector in pursuit of leftist political aims in coordination with elites in international organizations and bureaucrats in the executive branch. ESG has repeatedly been employed against critical industries like agriculture and energy production that climate activists disfavor.

The proposed NAC scheme expands these efforts. It is designed to change the standards for listed investments to encourage the lockup of large swaths of public and private land. NACs would be required to remove enrolled land from key productive uses — with essential economic activities including industrial-scale agriculture, traditional fossil-fuel development and mining prohibited. This comes along with other bureaucratic efforts from this administration to limit the use of our federal lands.

These efforts have the potential to deprive U.S. citizens of the benefits of our resources by removing public and private sector accountability to advance a radical climate agenda. As is characteristic of ESG, proponents of NACs want to circumvent democratic processes for public policy decisions on major issues — like preventing American energy production — by using the financial sector. At the same time, proponents hope to manipulate the standards for economic accountability in the financial sector by changing the rules of the game.

The lack of transparency is the point. Investors and voters alike must be vigilant about the risks.

The SEC’s proposal acknowledges that climate aims have been limited by an “inability to transparently present the economic case … based on traditional measures for financial performance” for vast capital flows to climate goals. Rather than accounting for market failures by advancing conservation through the democratic process, as the U.S. has done time and again, the proposal would outsource the stewardship of precious American resources, including public lands, to companies like BlackRock or even foreign investors in places like Russia and China.

Without clear accountability for financial performance, the pensions of hardworking Americans could be unknowingly employed to limit the production of resources like the energy that powers our lives or the food that feeds us.

This advances the ESG push to concentrate economic control directed by so-called experts at international organizations such as the World Economic Forum and the United Nations. The NAC reporting framework was developed “based on the natural capital accounting standards established in the United Nations System of Environmental-Economic Accounting.” Though the proposed rule touts investor demand for “pure-play exposure to nature and climate,” the genesis of this rule is not exactly market-based.

To couple human progress with environmental protection, we must reject radical climate activism disguised as market solutions. Instead, we must embrace right-sized, transparent government protection of the public interest alongside free market principles that encourage competition, innovation and — critically — growth.

As Elon Musk said of ESG, “The public is being lied to.” The Biden administration is hoping that the proposed rule will cross the finish line in the dark because Americans would reject it if its consequences were brought to light. Tellingly, the SEC started with an unusually short comment period of 21 days. However, mounting pushback led to an extension until Jan. 18.

I encourage you to add your voice in opposition to the proposed rule. Together, we can take on the ESG agenda and demand transparent stewardship of our resources for the benefit of the American people. Our future must be pro-growth.

• Carla Sands is the former U.S. ambassador to Denmark. She serves as vice chair of the Center for Energy & Environment at the America First Policy Institute.

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