401(k) plans run by money management firms that incorporate environmental, social, and governance (ESG) factors in their investment decisions are under attack.
Earlier this month, a Texas U.S. District Court judge ruled in favor of an American Airlines pilot who sued the airline in a class action lawsuit for hiring an investment manager (BlackRock) that bases its investment decisions for AA’s 401(k) plan on ESG and non-financial factors. The plaintiff argued that American Airlines violated its fiduciary duties by mismanaging the retirement plan when they utilized investment managers pursuing non-financial and nonpecuniary ESG policy goals.
