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Twenty-two state financial officers are demanding answers from top credit rating agencies including Moody’s, Fitch and Standard & Poor’s that allegedly rely on outdated climate change policies — bizarrely leading to higher rankings for Chinese businesses while US companies get downgraded, The Post has learned.
In a letter sent to the agencies Wednesday, the state treasurers and auditors argued their own finances could be hurt if the bodies use the discredited “Environmental, Social, and Governance” framework, or ESG, to downgrade publicly traded companies in which the states have invested billions of dollars.
If those companies start losing money, the states could see smaller funds – threatening their ability to pay for roads and schools, as well as pensions for police officers, firefighters and teachers, according to a copy of the letter obtained by The Post.
In one egregious case, the letter claimed, S&P downgraded US oil and gas companies based on ESG-related “risks” – but reaffirmed an A+ rating for two Chinese state-owned oil and gas companies, saying they were “likely to fare better than their international peers.”
The financial officers argued it is “nonsensical by any objective standard” to find that Chinese state-owned firms are better positioned on ESG, since China emits more pollution than any other country and the Chinese Communist Party is a “prolific human rights abuser.”
While the letter focuses on the rating agencies’ alleged tree-hugging goals, it specifically cites ESG, a policy that notoriously champions DEI in addition to the environment.
“The ratings agencies’ use of ESG is so subjective and inconsistent that while American companies were downgraded, ratings were affirmed for state-owned Chinese companies that are worse by every objective ESG metric,” the letter said.
“Ratings agencies should use objective and consistent methodologies instead of using false and retracted ESG predictions, and should reverse downgrades that were based on those false predictions.”
The financial officers claimed credit rating agencies have also continued to rely on outdated and, in some cases, retracted environmental studies, raising “methodological concerns” on the use of “speculative” predictions.
Moody’s and S&P, for example, have continued to rely on a 2024 Nature study that projected catastrophic economic losses due to the effects of climate change – even after it was retracted in 2025 following critiques from other researchers, the financial officers claimed.
“This important letter puts the nation’s top credit rating agencies on notice for playing political games at the expense of everyday Americans, and it also gives them an opportunity to once again do what they were designed to do,” OJ Oleka, CEO of the State Financial Officers Foundation, told The Post.
“S&P, Moody’s and Fitch can be respected sources of financial analysis, or they can be activists for an outdated ideological agenda, but they cannot be both.”
Rating agencies are also using other ESG predictions that have not come to fruition, like forecasts that fossil fuel use would decline, the officers said. While the growth of fossil fuel emissions has slowed, studies have not shown a dramatic decline in fossil fuel use.
The letter also argued that predictions that governments would crack down on fossil fuel use are inaccurate. The Trump administration has rolled back stringent Biden-era fuel emissions standards.
The state treasurers argued that “credit ratings should rest on objective financial analysis rather than politically contingent judgments.”
They are demanding answers to questions on how the credit ratings agencies rely on the retracted studies and incorporate ESG into their evaluations.
Twenty-two auditors and treasurers from 17 red states signed the letter — Arizona, Arkansas, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Nebraska, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, Utah and West Virginia.