Attorneys General Challenged Credit Agencies Climate Models
A coalition of 23 state attorneys general has asked the SEC to investigate whether climate models are skewing credit ratings.
Updated on Sept. 24, 2026 in Economic Policy
Live Poll
Should credit rating agencies incorporate environmental and social policies into their financial assessments?
State officials have requested a federal probe into Moody's, Fitch, and S&P Global, alleging that these agencies rely on flawed climate change assumptions to assess financial risk. The petition targets the methodology used to determine creditworthiness for companies and governments across the United States.
Why it matters
The coalition claims that credit agencies are incorporating retracted research and extreme climate scenarios, which could potentially result in inaccurate credit ratings. Changes in how these agencies weigh environmental factors may impact the cost of borrowing for both businesses and municipalities.
A coalition of 23 state attorneys general raised concerns about an estimated $41.4 trillion in global economic losses projected by 2050. This figure represents approximately 14.5% of total global GDP, though the validity of the underlying modeling remains contested.
The players
Moody's
A global credit rating agency that provides financial analysis and assesses the risk of corporate and government debt instruments.
SEC Office of Credit Ratings
The federal division responsible for supervising credit rating agencies to ensure they follow consistent and transparent methodologies.
S&P Global
A major financial services company that issues credit ratings and benchmarks used by investors to determine the risk of various securities.
Fitch
A global credit rating agency that assesses the creditworthiness of borrowers, influencing the interest rates these entities pay on debt.
The details
The coalition specifically cites the use of the RCP 8.5 emissions scenario and a 2024 Nature paper that was later retracted. By integrating these environmental, social, and governance (ESG) factors into their risk assessments, agencies determine the interest rates and access to capital for corporate and government entities. The attorneys general argue that these practices prioritize specific climate assumptions over traditional financial metrics.
Timeline
2024: The Nature paper cited by the coalition was published and subsequently retracted.
August 2026: Moody's released a report detailing potential heat and water stress impacts on businesses.
September 24, 2026: The article regarding the coalition's letter to the SEC was published.
2050: The target year for Moody's projection of $41.4 trillion in global economic losses.
Money Landscape
The petition sits within the ongoing debate over the role of ESG metrics in financial regulation under the Securities Exchange Act of 1934. This move represents a push to standardize how agencies incorporate long-term environmental projections into traditional credit assessments.
Investors and households with municipal bond holdings should monitor these proceedings, as shifts in rating methodologies could impact the yields of government debt. Consult a qualified financial professional to assess how changes in corporate credit risk perceptions might affect your broader portfolio exposure.
The takeaway
The core of this dispute is whether climate projections meet the standard for financial risk assessment or if they introduce speculative bias. Readers should keep an eye on SEC policy updates, as any resulting changes to credit modeling could impact the cost of borrowing for local and national governments.
Further reading
For more information on how regulatory changes influence the credit market, visit Economic Policy.
Live Poll
Should credit rating agencies incorporate environmental and social policies into their financial assessments?
