Federal Judge Blasts DEI and BlackRock’s ‘Incestuous’ Relationship in New Ruling

A federal judge in Texas ruled against American Airlines after the company centered employee retirement plans on environmental, social, and governance factors, also known as ESG.

U.S. District Judge Reed O’Connor concluded on Jan. 10 that American Airlines failed to exercise its fiduciary duty to make investment decisions for retirement accounts based on the best interests of the beneficiaries, according to a report from Reuters.

O’Connor added that American Airlines had inappropriate ties to BlackRock, the asset management behemoth which has long been a leading advocate for the ESG investing movement.

“The evidence made clear that [American’s] incestuous relationship with BlackRock and its own corporate goals disloyally influenced administration of the Plan,” O’Connor wrote in the decision.

The decision came after a class action lawsuit from American Airlines pilot Bryan Spence on behalf of some 100,000 retirement savings participants.

O’Connor will decide at a later date whether the beneficiaries suffered harm and whether the airline must pay damages.

A spokesperson for BlackRock denied in a statement to Reuters that the company’s emphasis on ESG diminishes the creation of investment value.

“We always act independently and with a singular focus on what is in the best financial interests of our clients,” the spokesperson asserted.

“Our only agenda is maximizing returns for our clients, consistent with their choices.”

Reuters noted that the ruling may have been the first of its kind since conservatives increased their criticisms of the ESG movement in recent years as pushing left-wing social objectives while distracting from the maximization of returns for investors.

Will Hild, the executive director of Consumers’ Research and an opponent of ESG, celebrated the decision on Jan. 10 via social media, asserting that “any company” which uses BlackRock “could be held liable in the same way” if the ruling holds.

BlackRock left the Net Zero Asset Managers initiative on Jan. 9 following a recent lawsuit from Texas and other Republican-led states.

The entity, which committed major players in the asset management industry to “a goal of net zero emissions in order to mitigate financial risk and to maximise long-term value of assets,” entirely ceased operations after the departure of BlackRock, per a Monday report from the New York Post.

The court decision and collapse of the ESG group arguably continue a trend away from diversity, equity, and inclusion in corporate America.

Walmart, one of the largest private-sector employers in the country, recently reversed many DEI programs after pressure from conservative activist Robby Starbuck, while social media companies owned by Meta also shuttered DEI initiatives.

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