Iowa Attorney General Brenna Bird announced on Apr. 23 that she has joined a coalition of 23 states calling on the top three credit rating agencies to stop using environmental, social, and governance (ESG) policies in their credit rating process. The letter was sent to Fitch Ratings, Moody’s, and S&P Global Ratings.
The coalition argues that these ESG policies could negatively affect Iowa farmers by increasing costs and regulations, which may impact food production and prices. According to the announcement, “ESG policies push a radical environmentalist agenda and burden farmers with high costs and regulations, hurting food production, shrinking farmland, and driving up food prices.”
Bird said fair access to credit is essential for Iowa farmers. “It is crucial for Iowa farmers to have fair access to credit and not have the leftist environmental agenda force them into unnecessary regulations, high costs, and decreased yields,” Bird said. “And Iowans should not pay higher prices for food because of those policies.”
The letter from the coalition outlines several concerns about the ratings agencies’ practices. It claims that the agencies have downgraded fossil-fuel companies’ credit ratings and that their methodologies encourage companies to prioritize ESG factors over other considerations. The letter also raises issues about potential conflicts of interest due to increased demand for ESG-related consulting services offered by these agencies.
Additionally, the coalition asserts that these practices could undermine state bond ratings and might violate antitrust laws or state laws prohibiting unfair trade practices.
The move signals ongoing debate over how financial institutions consider environmental and social factors in their decision-making processes.
