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American Airlines Violated Federal Law by Prioritizing ESG in $26 Billion 401(k) Plan, Judge Rules

Jan 10, 2025, 10:14 PM

American Airlines Inc. was found to have violated federal law by prioritizing environmental, social, and governance (ESG) investment goals in its $26 billion 401(k) plan, according to a ruling by U.S. District Judge Reed O’Connor in Texas. The judge determined that the airline breached its fiduciary duty of loyalty under the Employee Retirement Income Security Act (ERISA) by allowing its plan to be influenced by corporate goals unrelated to the financial interests of its employees. The lawsuit, brought by former pilot Bryan Spence on behalf of over 100,000 plan participants, highlighted American's use of BlackRock Inc. as an asset manager, which pursued ESG goals through proxy voting and shareholder activism. While the airline was found to have acted disloyally, it was not found to have breached its duty of prudence, as its actions were in line with prevailing industry standards.