State treasurers demand rating agencies justify ESG-driven downgrades of US firms
Twenty-two state treasurers and auditors wrote to Moody’s, Fitch and S&P, asking why ESG criteria are lowering U.S. company ratings while boosting Chinese state-owned firms.
A coalition of 22 state financial officers from 17 red states sent a formal request to the three major credit rating agencies, demanding transparency on how ESG factors influence their ratings. They argue that ESG-based downgrades of U.S. firms could erode billions of dollars in state-held investments, threatening budgets for roads, schools and public-sector pensions. The letter highlights a specific case where S&P lowered U.S. oil and gas companies for ESG risks while maintaining an A+ rating for two Chinese state-owned oil firms, which the officers deem contradictory given China’s high emissions and human-rights record.
They also accuse the agencies of relying on outdated or retracted research, such as a 2024 Nature study withdrawn in 2025, and on unfulfilled predictions about rapid fossil-fuel decline. OJ Oleka, CEO of the State Financial Officers Foundation, warned the agencies that they must choose between sound financial analysis and activist agendas. The treasurers seek answers on the agencies’ methodologies and call for the reversal of ESG-driven downgrades that lack objective basis.
Why it matters
State investment returns and public-service funding could be harmed by rating methods that favor political agendas over financial reality.
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