Bloomberg interviews Jeff Hahn about ruling on ESG goals in retirement plans

Stris & Maher partner Jeff Hahn was featured in a recent Bloomberg article analyzing the U.S. District Court for the Northern District of Texas’s decision ordering American Airlines to strip ESG goals from its 401(k) plan.

The article, titled “American Airlines Judgment Leaves Room For More ESG 401(k) Suits,” explores how ESG critics can force changes to company retirement plan policies through the courts.

On Sept. 30, U.S. District Court for the Northern District of Texas Judge Reed O’Connor ordered the airline to revamp and remove ties to environmental, social, and corporate governance (ESG) goals from its retirement plan after finding the company acted disloyally by favoring such objectives. He declined to award monetary damages because he found no evidence of financial loss to the plan.

According to the article: the injunctive relief banning non-pecuniary activities like ESG proxy voting and requiring American Airlines to appoint independent members of its benefits committee are practical measures to ensure regulatory consistency and defend against ESG-related attacks and litigation.

“This was an unusually prescriptive injunction, and probably the most notable outcome of the case,” said Jeff Hahn, a Stris & Maher LLP partner and former U.S. Labor Department attorney. “But I think it is more reflective of Judge O’Connor’s particular hostility to ESG and his desire to award some type of remedy where monetary relief was unavailable, rather than a harbinger for a broader trend.” “The difficulty lies in distinguishing ESG factors as ends in themselves, and ESG factors as being relevant to investment performance, which even Judge O’Connor acknowledged is permissible,” said Hahn. “That line is a fuzzy one and presumably will complicate complying with this injunction.”

To read the full Bloomberg article, click here.