State AGs demand investigation into credit rating agencies over ESG claims

A coalition of Republican state attorneys general, led by Montana, has requested that federal regulators investigate major credit rating agencies regarding their use of environmental, social, and governance (ESG) criteria. In a letter to the Securities and Exchange Commission’s (SEC) Office of Credit Ratings, the group alleges that Moody’s, Fitch Ratings, and S&P Global Ratings use questionable climate assumptions that may unfairly impact fossil fuel companies and energy-dependent governments.

The attorneys general specifically challenged a recent Moody’s report concerning heat and water stress. They argue the agency relies on the Representative Concentration Pathway 8.5 (RCP 8.5), a high-emissions climate scenario that some researchers have characterized as implausible under current energy trends. The coalition contends that these rating decisions could increase borrowing costs for certain industries and states by affecting their creditworthiness based on ESG-driven models.