Airline ESG Ruling Imperils Work of BlackRock, 401(k) Managers

A Texas federal judge has targeted “cartel-like” 401(k) investment managers in a ruling against American Airlines Group Inc. that could put nearly every plan in the country at risk of a fiduciary mismanagement lawsuit.

US District Court for the Northern District of Texas Judge Reed O’Connor said American Airlines broke federal benefits law by failing to rein in its investment manager BlackRock Inc. when it allegedly pursued a “green” shareholder activism agenda. Specific investments the workers had access to through BlackRock-managed index funds suffered as a consequence, O’Connor said.

BlackRock joined State Street Corp. and the Vanguard ...