A group of state attorneys general wrote to the US Securities and Exchange Commission and major credit-rating firms, raising concerns about the use of environmental, social and governance factors in downgrade decisions.
The officials from 23 Republican-led states, which include Texas, Florida and Oklahoma, said Fitch Ratings, Moody’s Corp. and S&P Global Ratings have “undisclosed material conflicts of interest,” in part because they have pledged to a United Nations-backed organization to incorporate ESG into their analysis.
Oklahoma Attorney General Gentner Drummond said Tuesday in a statement that credit-rating companies have taken action against states and municipalities based on “speculative ESG assumptions that never materialized.” He said they “strayed from their own methodologies in downgrading, or threatening to downgrade, states and municipalities with fossil-fuel production revenues, which is why I am stepping in to demand answers.”
The letter signed by Drummond, a candidate for Oklahoma governor, and the other attorneys general marks the latest attack on ESG by GOP lawmakers. They have accused money managers of colluding to influence energy markets and curb coal output, and have proposed legislation to protect US companies from European ESG regulations.
Attention is now turning to credit-rating companies, which affect how easily corporations and municipalities can repay debt. Downgrades typically raise borrowing costs and make it harder to attract new investors.
The states’ letter says downgrades are often “premised on far-fetched ESG goals.” It calls on credit-rating companies to “withdraw from or disclose ESG commitments” and “eliminate or disclose ESG consulting conflicts,” among other actions.
An S&P spokesperson said the company is aware of the letter and “takes these matters very seriously,” declining further comment. Moody’s is reviewing the letter and “will engage through appropriate channels,” a spokesperson said. Fitch hasn’t responded to requests for comment, and an SEC spokesperson declined to comment.
Earlier this year, Fitch Ratings published a report saying that climate risk is threatening the credit rating for dozens of countries. The reason, Fitch says, is that more frequent extreme weather shocks are making it harder to service debt, especially among smaller nations.
A separate study from the London School of Economics and Political Science found that nature loss itself may drive government borrowing costs higher, especially in the short term.
Photo: Austin Knudsen, Montana’s attorney general, Gentner Drummond, Oklahoma’s attorney general, and Andrew Bailey, Missouri’s then-attorney general, during a House Homeland Security Committee hearing in Washington, DC, on Jan. 10, 2024. Photographer: Graeme Sloan/Bloomberg
Copyright 2026 Bloomberg.
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