22 State Attorneys General Accuse Moody’s of Using Discredited Climate Model in Ratings

A coalition of 22 state attorneys general has filed a complaint asking the Securities and Exchange Commission to investigate Moody’s, one of the world’s largest credit rating agencies, over its use of a climate scenario that scientists have since deemed implausible.

The complaint focuses on an August Moody’s report that used Representative Concentration Pathways (RCP) 8.5, an extreme emissions scenario, to project future heat and water risks facing American industry. Moody’s said the analysis was intended to help insurers, lenders and investors “stress-test exposure” and price future risks.

Researchers developing the next generation of climate scenarios concluded earlier this year that RCP 8.5 had become implausible given current emissions trends and climate policy. The federal Office of Science and Technology Policy has also proposed against using RCP 8.5 as a baseline for the upcoming Fifth National Climate Assessment, describing it as “implausible” and not “policy-relevant” for federal planning purposes.

Montana Attorney General Austin Knudsen, among the officials behind the complaint, wrote that “rather than reversing downgrades based on false predictions, Moody’s is relying on an extreme scenario that has been officially abandoned and an extreme scientific paper that has been officially retracted.”

The August report examined roughly 159,000 water-intensive U.S. facilities in mining and quarrying, food and beverage production, and heavy manufacturing, projecting that about 49,000 of them could face high or very high water stress in coming decades.

A retracted paper and a $41 trillion figure

The attorneys general also point to a $41 trillion estimate that Moody’s continues to feature prominently on its website. That figure traces back to a 2024 climate-economics paper that was retracted for serious errors. The retracted paper fed into the NGFS “Phase 5” damages model, which in turn fed into Moody’s estimate — placing the number two steps removed from the retracted research and reliant on the same RCP 8.5 scenario now considered outdated.

The complaint argues that Moody’s continued promotion of that figure, while selling ESG-related products, raises questions about undisclosed conflicts of interest. The filing states that Moody’s push toward using dire ESG predictions “is consistent with undisclosed material conflicts of interest regarding Moody’s ESG-related services, commitments, and goals.”

Stakes for Alaska and Wyoming

The attorneys general say these ratings carry real financial consequences, affecting borrowing costs and investment decisions for energy companies and for states that depend on fossil-fuel revenue. The complaint specifically names Alaska and Wyoming, where rating agencies have cited the states’ reliance on fossil-fuel industries in their financial assessments. The coalition argues that outdated ESG assumptions could leave taxpayers and energy-producing states bearing higher costs.

The coalition is asking Moody’s to explain or reverse ESG-driven downgrades, rely on credible scientific sources, and either withdraw from ESG-related commitments and consulting work or disclose any related conflicts of interest. The group is also evaluating potential antitrust action.

This is not the first such action against ratings agencies. In April, 23 state attorneys general accused all three major credit rating agencies of using flawed ESG predictions to downgrade energy companies and states while failing to disclose conflicts of interest behind those decisions. Earlier this year, Vanguard agreed to pay $29.5 million to settle a separate multistate antitrust lawsuit over alleged ESG-driven conduct affecting the coal industry, and accepted restrictions on using its holdings to advance ESG goals.