Attorneys General Challenged Credit Rating Agency ESG Use
A state coalition has asked the SEC to investigate whether climate-risk modeling compromises the integrity of corporate credit ratings.
Updated on Oct. 4, 2026 in Economic Policy
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A coalition of Republican state attorneys general requested that the SEC investigate the use of environmental, social, and governance (ESG) criteria by Moody's, Fitch Ratings, and S&P Global Ratings. The coalition argues that these practices negatively impact fossil-fuel industries and rely on flawed scientific modeling.
Why it matters
For business operators, this dispute highlights how the metrics used by rating agencies to assess creditworthiness are becoming a battleground for political and regulatory scrutiny. If the SEC adopts a stricter stance on how agencies incorporate climate data, it could force a shift in how companies report their environmental exposures to maintain favorable credit profiles.
The coalition is targeting the three major nationally recognized statistical rating organizations, citing projections that physical climate risks could result in $41.4 trillion in economic losses, or roughly 14.5% of global GDP, by 2050.
The players
Moody's
A dominant global credit rating agency that provides financial analysis and risk assessments for debt markets.
S&P Global Ratings
A major credit rating provider that serves as a critical arbiter of corporate debt risk for global investors.
Fitch Ratings
A leading international rating agency that evaluates the creditworthiness of companies and sovereign entities.
SEC Office of Credit Ratings
The federal regulatory body responsible for oversight and enforcement of standards for nationally recognized statistical rating organizations.
Liz Murrill
The Attorney General of Louisiana who serves as a prominent member of the coalition challenging current ESG practices.
The details
The state attorneys general claim the agencies rely on climate-risk scenarios that unfairly burden fossil-fuel sectors, specifically disputing Moody's use of the RCP 8.5 model. The letter further alleges that Moody's cited a 2024 Nature paper that was subsequently retracted, undermining the integrity of their underlying methodology. The coalition is pushing for the agencies to either eliminate these ESG commitments or provide full disclosure regarding the scientific basis for their criteria.
Timeline
A Nature paper used in climate modeling was published in 2024 and later retracted.
Moody's published a report on heat and water stress in August 2026.
The news regarding the state attorneys general letter was published on October 4, 2026.
Moody's established 2050 as the target year for its $41.4 trillion global economic loss estimate.
Market Landscape
This move marks a challenge to the established oversight of the SEC's nationally recognized statistical rating organizations. It follows a broader trend of state-level litigation aimed at limiting the adoption of ESG metrics in corporate and financial governance.
Owners should evaluate whether their company's internal sustainability disclosures are currently being factored into credit assessments. Operators in high-carbon industries should specifically monitor how rating agency methodologies evolve in response to this regulatory inquiry.
The takeaway
The scrutiny of credit agencies suggests a tightening environment for ESG-influenced risk assessment, potentially shifting how lenders view capital projects. Operators should track the SEC's response to this coalition to determine if new disclosure requirements or methodology audits are forthcoming.
Further reading
For more on the changing regulatory environment, see the Economic Policy section.
Source note: This article includes information reported by The Western Journal.
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