Attorneys General Challenged Credit Agencies Over Climate Data
A coalition of 23 state attorneys general is urging the SEC to investigate whether credit rating agencies rely on flawed climate models.
Updated on Sept. 24, 2026 in Economic Policy
Live Poll
Should credit rating agencies incorporate environmental and social policies into their financial assessments?
Republican attorneys general have demanded that federal regulators scrutinize the methodology used by Moody's, Fitch, and S&P Global to evaluate climate-related financial risk. The coalition claims these firms incorporate unreliable climate assumptions and retracted research into credit ratings that affect businesses.
Why it matters
The outcome of this challenge could force a shift in how credit agencies incorporate environmental risk factors into their evaluations of public and private entities. For operators, the reliance on these models impacts the cost of capital and how financial risks are weighted in corporate credit assessments.
A coalition of 23 state attorneys general is pushing for federal oversight, citing concerns over models like one estimating $41.4 trillion in global economic losses by 2050. These three agencies, which the SEC classifies as nationally recognized statistical rating organizations, face pressure regarding the validity of their current ESG risk frameworks.
The players
Moody's
A globally significant credit rating agency that provides financial analysis, risk assessment, and debt market research.
SEC Office of Credit Ratings
The federal regulatory body responsible for overseeing the integrity and methodology of credit rating agencies.
S&P Global
A major financial services company and provider of credit ratings that serves as a benchmark for debt markets.
Fitch
A global credit rating agency that evaluates the financial health and risk profiles of corporations and governments.
The details
The attorneys general allege that agencies are using outdated or flawed research, including a retracted 2024 Nature paper, to calibrate their models. This impacts companies by potentially inflating the perceived risk of physical climate events, such as heat and water stress, which can directly influence creditworthiness and debt pricing. The coalition specifically highlighted Moody's utilization of the RCP 8.5 emissions scenario as a point of contention for potential bias in credit risk assessments.
Timeline
A Nature paper used in climate modeling was published and later retracted in 2024.
Moody's released a report concerning heat and water stress in August 2026.
State attorneys general released their letter to the SEC on September 24, 2026.
Projections for the estimated $41.4 trillion in economic losses extend to 2050.
Market Landscape
This move represents an escalation in the state-level pushback against the incorporation of environmental, social, and governance factors in financial services. It sits within the broader context of the SEC's regulatory authority over nationally recognized statistical rating organizations.
Operators should monitor whether rating agencies update their risk modeling as a result of this pressure, which could influence future borrowing costs and credit availability. Management teams should review their current disclosure documentation to understand how their sector's exposure to environmental factors is being quantified by major rating firms.
The takeaway
The scrutiny of climate-modeling inputs signals a potential cooling in the integration of highly speculative environmental metrics into core debt ratings. Businesses should track if rating agencies announce updates to their methodology regarding emissions scenarios or the use of climate-related scientific literature.
Further reading
For more on the evolving regulatory environment, see our Economic Policy section.
Source note: This article includes information reported by The Daily Caller.
Live Poll
Should credit rating agencies incorporate environmental and social policies into their financial assessments?
