Alabama Attorney General Steve Marshall has joined a coalition of 23 states in raising legal concerns over the use of environmental, social and governance, or ESG, policies by three of the nation’s largest credit rating agencies, arguing the practices could distort markets and increase costs for consumers.

The coalition sent a letter to Fitch Ratings, Moody’s and S&P Global Ratings, questioning the agencies’ commitment to systematically incorporating ESG considerations into credit ratings, a news release said. According to the attorneys general, those policies rely on speculative predictions and have already led to downgraded ratings for traditional energy companies, while also posing a potential threat to state bond ratings.

“It is deeply concerning that major credit rating agencies continue to use unlawful ESG-driven decision making in their ratings in ways that raise borrowing costs across the economy. When financing becomes more expensive, businesses pass those costs on to consumers. This means higher prices for goods, fewer jobs, and less investments in our communities,” Marshall said in the release. “Credit ratings should be based on clear financial risks, not subjective standards that distort markets and limit competition. If these credit rating companies continue these liberal practices, consumers and businesses will keep paying the price.”

The letter outlines several concerns about the agencies’ methods, including allegations that their ESG frameworks pressure companies to prioritize nonfinancial factors while simultaneously driving demand for the agencies’ own ESG-related consulting services. The states argue that dynamic may represent an undisclosed and unlawful conflict of interest.

In addition, the coalition questions whether the ESG-driven policies could violate antitrust laws or run afoul of state statutes prohibiting unfair and deceptive trade practices.

Credit rating agencies play a critical role in financial markets by assessing the risk of bonds and other debt, influencing borrowing costs for corporations, governments and public projects. Any shift in methodology can have broad economic implications, particularly for industries such as energy that rely heavily on financing.

Alongside Alabama, the letter was signed by attorneys general from Alaska, Arkansas, Florida, Georgia, Idaho, Iowa, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, Texas, Utah, West Virginia and Wyoming.

The full letter is available at www.alabamaag.gov.