23 state AGs demand top ratings agencies explain ESG-driven downgrades

By Tate Miller
The Center Square

Nearly two dozen state attorneys general are asking the three top ratings agencies to explain their “ESG-driven” downgrades of fossil-fuel companies.

In a letter to the agencies, the 23 attorneys general allege the agencies promote a radical climate agenda.

Executive director of Consumers’ Research Will Hild told The Center Square that ratings agencies – Fitch, Moody’s and S&P – “should be providing objective financial analysis for consumers and investors to rely on, not using their market power to push woke ideology.”

“As the state attorneys general expose in this letter, these ratings groups have been weaponizing their credit ratings in an effort to push a radical ESG agenda,” Hild said.

“Instead of providing analysis through the lens of fiduciary duty and financial prosperity, these woke activists are colluding with UN-backed climate activists and using flawed methodologies to meet arbitrary net-zero and ESG goals,” Hild said.

“Thanks to leadership by the AGs, the depths of collusion by the woke cartel continues to be exposed,” Hild said.

In their letter, the Attorneys General wrote that the ratings agencies have used “flawed methodologies to downgrade, or to threaten to downgrade, states and municipalities with fossil-fuel production revenues,” and “yet [the agencies] largely have not reversed the [d]owngrades after highly speculative ESG predictions proved to be wrong.”

The letter additionally stated that the “[d]owngrades materially contravened the Ratings Agencies’ stated methodologies and are consistent with undisclosed material conflicts of interest.”

For instance, “all three agencies have pledged to a United Nations-backed group that they will ‘incorporat[e] ESG into credit ratings and analysis in a systematic…way,’” the letter said.

Additionally, “Moody’s and S&P pledged to help ‘achieve’ net zero,” the letter said.

The attorneys general requested in their letter that the ratings agencies complete five actions, which are: “explain ESG-driven downgrades,” “withdraw from or disclose ESG commitments,” “revise sector-specific methodologies,” “eliminate or disclose ESG consulting conflicts,” and “certify internal controls review.”

“Failure to take these corrective actions will inform the undersigned attorneys general’s assessment of whether enforcement action under state UDAP laws, antitrust investigation, referral to the SEC’s Office of Credit Ratings, or coordination with the U.S. Department of Justice is warranted,” the attorneys general wrote.

CEO of the American Energy Institute Jason Isaac told The Center Square that the attorneys general’s allegations against the three ratings agencies in question “confirm what many have warned for years: ESG is not about risk assessment, it is about reshaping markets through financial coercion.”

“Credit rating agencies appear to have abandoned objective, data-driven analysis in favor of speculative, politically aligned assumptions that penalize reliable American energy while rewarding favored industries,” Isaac said.

“That kind of distortion doesn’t just mislead investors, it raises costs for states, undermines domestic production, and ultimately hits consumers with higher prices,” Isaac said.

“If these claims hold, regulators and attorneys general should treat this as a serious breach of trust and restore integrity to the ratings process,” Isaac said.

The attorneys general’s letter also spoke of a CCP advantage, as founder, CEO and chairman of State Armor Michael Lucci told The Center Square.

“It is absurd that ratings agencies claim to measure environmental, social, and governance performance while awarding stronger marks to a CCP-owned company tied to an authoritarian regime with a well-documented human-rights record than to major U.S. energy firms,” Lucci said.

“That contradiction becomes even more glaring when China has expanded coal capacity at a pace exceeding much of the rest of the world combined, undermining any serious claim that these scores are rooted in consistent environmental standards,” Lucci said.

“Outcomes this detached from reality underscores why the entire ESG ratings system deserves every ounce of scrutiny it gets,” Lucci said.

When reached, an S&P spokesman told The Center Square: “S&P Global is aware of the letter sent to its office by the 23 State Attorney Generals.”

“We take these matters very seriously and do not have further comments at this time,” the spokesman said.

Neither Fitch nor Moody’s responded to The Center Square’s request for comment.

The 23 state attorneys general that signed the letter to S&P, Fitch, and Moody’s hail from Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, Texas, Utah, West Virginia, and Wyoming.