Leave the Politics Out of State Credit Ratings
For years, the Biden administration and some of the biggest players on Wall Street pushed a financial system that put political priorities ahead of financial results.
Instead of asking a simple question of “Will this investment make money?”, decisions started being influenced by things like climate policies, diversity goals, and other so-called Environmental, Social, and Governance standards, better known as ESG.
President Trump has taken a hammer to much of that system. But there are still pieces of it left, and we need to keep knocking them down.
One of those pieces involves the credit ratings given to states.
You may never think about Mississippi’s credit rating, but it matters to your wallet. A good credit rating helps Mississippi borrow money at lower interest rates when we finance major projects like roads, bridges, and economic development. Lower interest costs mean taxpayers get more for their money.
The problem is that the three major credit-rating agencies (S&P, Moody’s, and Fitch) have incorporated ESG factors into their ratings.
S&P, for instance, has cited ESG considerations in negative outlooks for states including Alaska, New Mexico, and Pennsylvania. Moody’s has used similar factors when evaluating Louisiana, Alaska, North Dakota, and Wyoming. Fitch has described ESG as an “increasingly important rating factor.” That should concern Mississippians.
Mississippi is a conservative state. Agriculture and energy are important parts of our economy. We aren’t going to abandon those industries or our values to make Wall Street happy. And we shouldn’t have to.
If Mississippi is paying its bills, managing its debt responsibly, growing its economy, and keeping its financial house in order, that’s what should determine our financial standing. A political disagreement over energy policy shouldn’t make it more expensive to build a highway.
That’s why earlier this fall I joined other state financial officers in calling on S&P, Moody’s, and Fitch to rethink how ESG factors are being used.
One of our biggest concerns is that these standards can be subjective and inconsistent. Consider this: S&P downgraded American oil and gas companies while giving an A+ ESG rating to two Chinese state-owned oil and gas companies.
As I explained to the ratings agencies: “Concluding that Chinese state-owned companies are better positioned on ESG than American companies is nonsensical…. Environmentally, China emits far more than any other country; socially, the Chinese Communist Party (CCP) is a prolific human rights abuser; and governance cannot get worse than being directed by the CCP, which reverses corporate transactions, forces corporate restructuring, and sends executives into exile.”
There are also serious questions about some of the research being used to justify these ratings. One climate study published in Nature in 2024 projected enormous economic losses from climate change. The study was later retracted after significant problems were identified with its methodology. Yet elements of that research have continued to influence financial analysis.
As State Treasurer, protecting Mississippi’s credit rating is one of my core responsibilities, and I understand that includes holding the rating agencies themselves accountable. Give us a level playing field. Judge us by whether we pay our bills and manage our money. Rate us on the strength of our finances – and leave the politics out of it.
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