Kentucky State Treasurer Allison Ball wrote a letter to one of the Big Three credit rating agencies criticizing the inclusion of environmental, social and governance factors in her credit rating for Kentucky.
Standard & Poor’s Global Ratings began including the factors in its state credit ratings in March. Kentucky received a neutral score on climate and governance indicators, but a slightly negative score on social factors, including an aging population.
Ball wrote that the new factors unfairly politicize credit ratings and place subjective judgments on a rating that should be based solely on financial factors. She compared the ratings to China’s authoritarian social credit system and urged S&P to abandon the changes.
“This creates a dangerous framework for state borrowing mechanisms, in which state solvency will fluctuate wildly with ever-changing political tides,” Ball wrote.
The state treasurer wrote the letter on behalf of four other elected Republicans, including state auditor Mike Harmon, secretary of state Michael Adams, attorney general Daniel Cameron and agriculture commissioner Ryan Quarles.
The letter is the latest in a series of steps Ball and other GOP officials have taken to resist the influence of climate change on long-term decision-making.
Earlier this year, Ball backed legislation that generally requires financial firms to work with the state stop boycotting the fossil fuel industry. If they don’t, the state must divest all of the company’s public investments.
Republican Ky. Attorney General Daniel Cameron write an open letter at the end of June to the EPA on behalf of 14 states calling its plan to limit pollution by ozone and greenhouse gases “arbitrary, capricious” and exceeding the authority of the agency.
In the letter to S&P, Ball wrote that the new rating system would hurt Kentucky’s economy due to its reliance on fossil fuels.
“A reduction in the production of coal, oil and gas would lead to an increase in unemployment, higher fuel costs and decreased overall tax revenue, which negatively impact Kentucky’s overall creditworthiness and cause undue hardship and suffering to the people of this state,” she wrote.
The S&P rating system takes into account in its analysis the risks related to climate transition, waste and pollution, natural disasters and biodiversity.
According S&P website.
In May, the United States Security and Exchange Commission offered similar disclosures from investment advisers that consider environmental, social and governance factors.
“It is important that investors have consistent and comparable information about the ESG strategies of asset managers so that they can understand what data underlies fund claims and choose the right investments for them,” he wrote. President Gary Gensler in a statement.
The American Institute of Certified Public Accountants supports the SEC’s efforts, saying shareholders have demanded a broader information base on which to make decisions.
“Integrated thinking and related insights into the range of financial and non-financial factors that affect a company’s ability to create value is needed in our complex and interdependent world,” wrote CEO Susan Coffey.
Kentucky is already feeling the effects of climate change. Over the next few decades, the state will become hotter and wetter, with increased risks of severe droughts, heat waves, and other natural disasters.
Humanity has profoundly increased the levels of heat-trapping gases in the atmosphere by burning fossil fuels, according to NASA. We have a limited amount of additional greenhouse gases that we can add to the atmosphere before we drastically disrupt planetary systems, including the biosphere, hydrosphere, and atmosphere.
Scientists from the United Nations’ Intergovernmental Panel on Climate Change say this decade is humanity’s last chance to limit warming to at least 1.5 degrees Celsius and avoid the worst impacts of climate change. climate change, but this will require deep emission reductions and a major transition in the energy sector .