Republican Attorneys General Challenge Downgrades of Fossil Fuel Companies
Recently, attorneys general from 23 Republican-led states sent letters to major credit rating agencies—Fitch, S&P, and Moody’s—regarding the downgrades of fossil fuel companies. They argue that these downgrades were based on what they perceive to be unreliable environmental, social, and governance (ESG) metrics.
The attorneys general expressed their concerns following the decision by the rating agencies to lower the ratings of fossil fuel companies citing “highly speculative ESG projections.” In their correspondence, they stated:
These downgrades violate the established methods of the agencies and are marked by material conflicts of interest. Notably, all three agencies have committed to collaborate within a United Nations-backed initiative. Furthermore, Moody’s and S&P have expressed ambitions to help achieve net-zero emissions. This use of flawed methodologies also threatens the financial stability of states reliant on fossil fuel revenues. Consequently, the actions of these agencies have negatively impacted the economy, contributing to the current surge in gasoline prices.
They highlighted that both Moody’s and S&P are part of the Net Zero Financial Services Provider Alliance, warning that this could lead to antitrust violations while needing to meet significant emission reduction targets.
The attorneys general pointed out, “Because the goal of net zero effectively necessitates a reduction in fossil fuel use by over 70% between 2022 and 2050, these agencies plan to tighten capital availability for fossil fuel companies, which would, in turn, diminish production.” This, they contend, could further exacerbate issues in the fossil fuel market.
They noted several past inaccuracies made by rating agencies regarding the ESG environment:
For instance, despite claims that government policies are becoming stricter, many governments have either shifted away from or failed to implement net zero policies. Agencies predicted an acceleration in ‘stranded assets’ due to peak hydrocarbon production, yet the IEA has stated that demand for oil and gas will persist until 2050. Additionally, despite believing that renewable energy would capture a larger share of the market, many governments are cutting subsidies, and automakers have reported significant losses in electric vehicle investments. Finally, although ESG mandates were thought to be tightening, the Net Zero Alliance has faltered, ESG funds have seen outflows, and traditional energy has outperformed the broader market historically.
The letter from the attorneys general demanded detailed explanations from rating agencies regarding their reasons for downgrading fossil fuel producers. They urged these agencies to reconsider their ESG-related commitments, adjust their methodologies, and improve their internal controls.
They concluded, “The downgrades stem from unrealistic ESG aspirations that were never met. Such actions not only violate established methodologies but also implicate conflicts of interest, and break SEC rules and state consumer protection laws. This has harmed states dependent on fossil fuel revenues, and previous settlements due to methodological issues have totaled over $2.3 billion.”
The attorneys general who endorsed the letter include:
Alabama, Alaska (Lead), Arkansas, Florida (Lead), Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska (Lead), North Dakota, Ohio, Oklahoma, South Carolina, Texas (Lead), Utah, West Virginia, Wyoming.
Consumer and energy advocacy groups echoed the sentiments of the letter. Will Hild, executive director of Consumers’ Research, stated:
Credit rating agencies like Fitch, Moody’s, and S&P ought to provide impartial financial analysis, rather than utilize their influence to push a specific ideology. As the attorneys general assert, these agencies seem to be using their ratings to promote a radical ESG agenda rather than focusing on accurate economic assessments.
Michael Rucci, founder and CEO of State Armor, criticized the agencies for their inconsistent ratings, stating:
It is ridiculous that a rating agency would score a company tied to the Chinese Communist Party higher than a major U.S. energy firm. This discrepancy highlights why the ESG rating framework warrants thorough investigation.
Jason Isaacs, CEO of the American Energy Association, added:
The focus of these allegations underlines that ESG is not a genuine risk assessment tool; it’s more about reshaping markets through financial pressures. If these claims hold true, it’s crucial for regulators and the Attorney General to consider this a serious violation of trust and take steps to restore integrity to the rating process.
A poll from 2025 indicated that 56% of Americans believe ESG to be a subjective concept that imposes progressive policies leading to increased prices for consumers.
