Treasurer John M. Schroder applauds S&P Global Ratings’ decision to remove ESG credit score indicators from its reports effective immediately, as announced by the New York-based credit rating agency. A vocal opponent of ESG intrusion into financial matters, Schroder has advocated against ESG rating factors, stating they contradict the tenets of fiduciary duty.
“This is progress and proof that it was worthwhile to speak up and voice Louisiana’s concerns with the unfair black eye our state has often received due to ESG scores factoring in our credit ratings,” said Schroder who has been working years to bring attention to the practice that costs Louisiana taxpayers money in terms of state bond ratings. “We get dinged for having a robust fossil fuel industry despite the fact that we are also on the cutting edge of energy efficiency research. Where are our points for that?”
Ratings are a factor in determining how much money the state must pay when selling bonds. When ratings increase, the cost to taxpayers goes down.
“Use of ESG score indicators to determine creditworthiness undermines what should be an impartial credit rating system,” stated Schroder who serves as chair of the State Bond Commission. “It changes the trajectory of the ratings system from gauging the ability to pay debt to forcing alignment with policy goals.”
Some external factors will still be included in S&P’s risk calculations, but not as an independent set of ESG factor scores.
“We deserve credit for having laws that guarantee our debts are paid. That’s what credit ratings are supposed to be based on, not social or environmental agendas,” he added. “Louisiana has not missed a payment in modern times. State law assures payments are made”