THE MORNING RANT: Major Federal Court Ruling - Corporations Allowing Their 401(k)s to be Used for ESG Purposes Are Engaging in Illegal Fiduciary Misconduct

News is breaking fast as woke corporations are facing consequences for their foray into left-wing political activism.

On one front, there are many recent headlines about corporations stepping back from their DEI (Diversity Equity Inclusion) initiatives, as the indefatigable Robby Starbuck continues to present woke corporations a simple offer - terminate their discriminatory DEI policies, or prepare to have their racist policies exposed, and then enjoy being the next Bud Light or Tractor Supply.

But another major front is opening up on the war against woke capital. Corporate DEI has an evil twin brother, ESG, or “Environmental Social Governance,” in which corporations use their power, money, and influence to advocate for the globalist, anti-carbon agenda of the World Economic Forum and other enemies of freedom. Well, there is some great news on this front too.

Thanks to a lawsuit by some pilots at American Airlines, a major federal court ruling just put corporations and money management firms on notice that it is a violation of federal law to misappropriate employees’ investment accounts to pursue the radical ESG agenda.

“American Airlines broke the law by focusing on ESG in 401(k) plans” [NY Post – 01/10/2025]

A federal judge in Texas on Friday said American Airlines violated federal law by basing investment decisions for its employee retirement plan on environmental, social, and other non-financial factors. The ruling by US District Judge Reed O’Connor appeared to be the first of its kind amid growing backlash by conservatives to an uptick in socially-conscious investing.

According to a Bloomberg Law report, “An expert witness for the pilots testified that BlackRock’s May 2021 proxy vote at ExxonMobil, which focused on ESG priorities, devalued energy stocks and caused the airline’s 401(k) plan to suffer more than $15 million in losses…”

This is significant. Because of BlackRock’s decarbonization agenda, it cast anti-energy proxy votes on behalf of the investors whose money it managed, causing a politically-motivated financial loss to those investors - a loss that was a predictable consequence of that proxy voting, and which was apparently intentional. And American Airlines knowingly let Black Rock financially harm its employees, in service to the ESG agenda.

Here is the actual ruling, with a hat tip to Steve Milloy (@JunkScience) for the link, and for noting this money quote from the federal court ruling:

“The facts here compellingly established fiduciary misconduct in the form of conflicts of interest and the failure to loyally act solely in the Plan’s best financial interests. BlackRock’s ESG influence is evident throughout administration of the Plan. The belief that ESG considerations confer a license to ignore pecuniary benefits is mistaken. ERISA does not permit a fiduciary to pursue a non-pecuniary interest no matter how noble it might view the aim. Plaintiff therefore proved by a preponderance of the evidence that American [Airlines] disloyally acted with an intent to benefit a party other than Plan participants and in a manner that was not wholly focused on the best financial benefit to the Plan."

Think about the magnitude of that final sentence. American Airlines chose to use the personal savings of its employees’ 401k plan “to benefit a party other than the Plan participants.” Misuse of money by a custodian to which it has been entrusted is a form of theft, and that is what American Airlines and Black Rock did to American Airlines employees. The same is true for every other company allowing Black Rock to mismanage money in service to its anti-freedom political agenda.

There need to be criminal consequences for the individuals at these firms who chose to allow employees’ savings to be illegally misused. (Attention Ken Paxton.)

Will Hild is covering this story well, noting that “Damages have yet to be awarded and the legal fight here is likely far from over, BUT this legal precedent *most definitely* has BlackRock scrambling... The court found that American Air used BlackRock for their retirement services — and BlackRock prioritized ESG metrics over generating financial returns — thus American Airlines was in violation of its fiduciary duty. If this holds, *any company* that used BlackRock (and thus their funds were used to advance ESG) could be held liable in the same way.”

Every corporation that uses Black Rock (and State Street, etc) better start taking a hard look at how those money managers are using proxy votes to illegally advocate for ESG.

Black Rock and its diabolic CEO, Larry Fink, should start lawyering up, since a federal court is now acknowledging that the company deliberately abandoned its fiduciary responsibilities to pursue a political agenda that negatively affected the retirement accounts and savings of millions of victims.

[buck.throckmorton at protonmail dot com]

posted by Buck Throckmorton at 11:00 AM

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