A coalition of Republican state attorneys general led by Montana Attorney General Austin Knudsen asked the Securities and Exchange Commission’s Office of Credit Ratings to scrutinize Moody’s, S&P Global Ratings, and Fitch Ratings over the use of climate and ESG inputs in their analyses, according to the Daily Caller News Foundation (DCNF), which first obtained the letter.
The clash over climate scenarios
The AGs focus heavily on an August Moody’s report examining how heat and water stress could affect businesses and financial institutions. According to the DCNF, the letter argues Moody’s relied on RCP 8.5—a high‑emissions climate pathway that researchers have described as implausible under current trends—for parts of its modeling. Moody’s told the DCNF that RCP 8.5 is one of several pathways it uses to estimate potential severity of future physical climate risks and to help insurers, lenders, and investors stress‑test exposures under adverse conditions. The Moody’s report also considered the lower‑emissions RCP 4.5 for portions of its analysis, while using RCP 8.5 for some U.S. water‑stress projections, per the DCNF.
The DCNF notes scientists have long debated the proper use of RCP 8.5. Researchers writing in Nature warned against treating it as the most likely “business‑as‑usual” outcome, while other research has framed it as a useful high‑end risk scenario rather than a central forecast.
A disputed $41.4 trillion estimate
The AGs also target a separate Moody’s estimate that physical climate risks could impose roughly $41.4 trillion in economic losses by 2050. Moody’s describes the figure as a potential global impact equal to about 14.5% of global GDP, according to the DCNF. The DCNF reports that a draft AG letter characterizes that figure as losses to U.S. GDP and argues the estimate is further compromised because its modeling framework drew on a 2024 Nature paper that was later retracted by its authors over data and methodological concerns.
What the AGs want
According to the DCNF, the attorneys general ask the rating agencies to explain or reverse ratings they contend were driven by ESG considerations; publish and consistently follow sector‑specific methodologies; and either eliminate certain ESG‑related commitments and consulting conflicts or disclose them to the SEC.
The SEC recognizes Moody’s, S&P, and Fitch as nationally recognized statistical rating organizations and oversees them through the Office of Credit Ratings. SEC rules require registered rating agencies to maintain procedures governing their methodologies and to disclose and manage specified conflicts, per the DCNF.
Pushback and unanswered questions
Moody’s, S&P, Fitch, and the SEC did not immediately respond to DCNF requests for comment. “Credit ratings should reflect financial reality, not an ESG agenda,” Jason Isaac, CEO of the American Energy Institute, told the DCNF. Will Hild, executive director of Consumers’ Research, similarly accused the agencies of relying on ESG considerations despite previous objections from state officials, in comments to the DCNF.
The DCNF adds that the new letter follows an earlier effort by 23 state attorneys general seeking explanations for allegedly ESG‑driven rating decisions. At the time, Republican Louisiana Attorney General Liz Murrill’s office said the coalition was questioning whether the agencies’ ESG policies complied with federal law.
Credit ratings assess a borrower’s ability to repay debts; a downgrade can increase borrowing costs and make bonds less attractive to some investors. The AGs’ letter, as described by the DCNF, asks the SEC to examine whether climate‑risk assumptions used by the big three raters are warranted and properly disclosed.
