A consumer advocate thinks a recent ruling against American Airlines carries the potential for "massive ramifications."
Will Hild, executive director of Consumers' Research, explains that employees sued the airline for continuing to use BlackRock to manage their pension funds, even though executives knew the asset management firm was misusing those pension funds to push an environmental, social, and governance (ESG) agenda that was costing those employees money.
Hild thinks this same pattern would apply to pretty much any corporation that has been using BlackRock to manage retirement funds, calling it "their bread and butter."
Last week, Texas federal Judge Reed O’Connor found that American Airlines violated its fiduciary duty of loyalty under the Employee Retirement Security Act – a major win for opponents of the progressive investing philosophy. "This ruling could very well cause a mass exodus of corporate clients from BlackRock if it's upheld in court," Hild suggests.
While Consumers' Research monitors the situation, he encourages consumers to get informed and be active in fighting ESG policies. "We have to destroy this," says Hild. "It's raising prices for consumers everywhere from the gas pump to the grocery store."
"If you want to know why woke capitalism happens, why you have these companies that seem to be constantly poking you in the eye, attacking your values, the answer is ESG," he adds. "It's being pushed by these large asset managers like BlackRock."
Because the company acted in accordance with industry practices, the district court judge did not conclude that American Airlines violated its duty of prudence. In other words, nothing that was alleged was outside industry norms.
More litigation is expected.
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