Obviously taking a page from George Soros’s playbook.
British billionaire Chris Hohn’s hedge fund holds billions of dollars in shares of two powerful credit-rating companies while seeking to push their climate priorities on the firms whose decisions can influence how much American businesses, schools and local governments pay to borrow money.
Moody’s and S&P Global wield enormous influence over borrowing costs across the American economy, with their credit assessments affecting everything from corporate investments to public infrastructure projects. Hohn’s TCI Fund Management holds major stakes in both firms and previously pushed them to adopt climate policies, raising questions about the influence wealthy investors can exert over institutions whose financial judgments carry significant consequences for American communities.
Dr. OJ Oleka, chief executive officer of the State Financial Officers Foundation, told the Daily Caller News Foundation that credit-rating decisions can have consequences extending well beyond Wall Street, particularly for smaller communities that rely on borrowing to finance public infrastructure.
Si years ago, Reuters reported Hohn began a campaign aimed at pushing hundreds of companies to adopt tougher climate measures by filing shareholder resolutions.
According to TCI Fund Management’s website, the firm submitted climate-related shareholder proposals at Moody’s and S&P Global under its “Say on Climate” initiative. The proposals called for yearly reporting of greenhouse gas emissions, strategies to cut those emissions, and non-binding shareholder votes on the companies’ climate plans.
Both Moody’s and S&P Global factor climate-related risks into their credit ratings. S&P Global has previously issued negative rating actions on major oil and gas companies, partly over worries about the sector’s shift away from fossil fuels.
Credit ratings affect the interest rates that companies and local governments pay when borrowing. The agencies maintain that climate risks can impact borrowers’ financial stability, but critics argue that weighing these factors could unfairly penalize certain industries or let political considerations shape decisions that carry major economic effects.
Last month, Montana Attorney General Austin Knudsen, joined by 21 other Republican state attorneys general, called on the SEC’s Office of Credit Ratings to investigate three credit rating agencies over claims that they are unfairly penalizing states that rely on fossil fuels. However, in light of the results of Tuesday’s midterm elections, any investigation of the origination’s ESG efforts may be put on hold.
Credit ratings should reflect financial reality, not ESG goals. Relying on unrealistic climate scenarios and retracted studies undermines rating integrity and can raise capital costs for U.S. energy producers.
PHOTO CREDIT: Pixabay
