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 agencies named are Fitch Ratings, Moody’s, and S&P Global Ratings.
The issue is significant for Iowa farmers and consumers because ESG-related requirements could affect access to credit and potentially increase costs throughout the agricultural sector. According to Bird, these policies may result in higher prices for food by imposing additional regulations and expenses on 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,” said Attorney General Bird. “And Iowans should not pay higher prices for food because of those policies.”
The letter sent by the coalition raises several concerns about the current practices of the ratings agencies. It asserts that these companies have downgraded fossil-fuel firms’ credit ratings, which could impact industries important to Iowa’s economy. The letter also claims that agency methodologies push companies toward prioritizing ESG factors over other considerations.
Further points raised include allegations that these practices might threaten state bond ratings and create an unlawful conflict of interest by increasing demand for ESG-related consulting services offered by the same agencies. The coalition contends this could violate antitrust laws or state laws banning unfair or deceptive trade practices.
As discussions around ESG continue nationally, officials say they will monitor how such rating methodologies affect local economies moving forward.
