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American Airlines' focus on ESG in 401( k) plan is unlawful, US judge guidelines

A federal judge in Texas on Friday said American Airlines broken federal law by basing investment choices for its employee retirement strategy on ecological, social and other non-financial aspects.

The ruling by U.S. District Judge Reed O'Connor appeared to be the very first of its kind amid growing backlash by conservatives to an uptick in socially-conscious investing.

O'Connor said American had actually breached its legal task to make financial investment choices based exclusively on the monetary interests of 401( k) plan beneficiaries by allowing BlackRock, its possession supervisor and a major shareholder, to concentrate on ecological, social and business governance (ESG) factors.

The evidence made clear that [American's] incestuous relationship with BlackRock and its own corporate objectives disloyally influenced administration of the Plan, composed O'Connor, an appointee of Republican former President George W. Bush.

The judge ruled after holding a four-day non-jury trial in June, in a class action by American pilot Bryan Spence on behalf of more than 100,000 participants in the retirement plan.

American did not right away respond to a request for remark.

BlackRock was not involved in the suit.

(source: Reuters)