In the letter, leaders tout the state’s sterling financial track record and object to S&P Global Ratings’ use of a subjective, politicized system to evaluate states’ creditworthiness. Historically, Idaho leaders’ careful and conservative management of the state’s finances has drawn high marks from S&P and other credit rating agencies. The ratings are widely used in the financial world. Similar to high credit scores for individuals, higher credit ratings for states can result in reduced borrowing costs.
The letter decries the introduction of subjective ESG criteria into the company’s rating system for states. It states, in part:
“…Idaho objects entirely to the S&P’s creation, use, and publication of Idaho and Idaho political subdivision public finance ESG credit indicators. Idaho will not participate in the S&P’s abandonment of its statutorily assigned responsibility for evaluating material factors in favor of S&P’s expansion into politically biased ESG credit indicators.”
“When Idaho’s finances are evaluated fairly on legitimate indicators, we do incredibly well,” State Treasurer Julie Ellsworth and Attorney General Lawrence Wasden said. “But the use of ESG criteria invites serious concern about what factors will now be prioritized, how they’ll be evaluated, and by whom. States that don’t go along with these new priorities could see their ratings downgraded, despite being on excellent financial footing. It’s a step in the wrong direction and could cost Idaho taxpayers millions of dollars.”
The letter was signed by four state constitutional officers, Idaho’s Congressional delegation, and legislative leaders. Signatories include Governor Brad Little, Attorney General Lawrence Wasden, Treasurer Julie Ellsworth, Controller Brandon Woolf, Senators Mike Crapo, and Jim Risch, Representatives Mike Simpson and Russ Fulcher, as well as Idaho House Speaker Scott Bedke and Senate President Pro Tem Chuck Winder. The letter was addressed to Douglas L. Peterson and Martina Cheung, two S&P Global Ratings executives.
In 2015, S&P admitted to falsely representing that its ratings were objective when, in fact, they’d been influenced by business relationships. As part of a resulting settlement, S&P paid Idaho and other states more than $1.3 billion. In the letter, Idaho officials say they’re concerned the company has failed to learn from its mistakes and is once again trying to curry favor with certain customers by creating a new, subjective ratings system. The letter also questions why Chinese and Russian energy companies have received higher ESG ratings than law-abiding American companies.
Read the full letter here.