Conservative Texas District Judge Reed O’Connor took time out of his packed schedule of trying to destroy the Affordable Care Act to hand down a genuinely unhinged decision.
According to O’Connor, American Airlines violated federal law by offering 401(k) plans that included funds managed by investment companies with environmental, social, and corporate governance (ESG) goals. It’s the newest—and dumbest—front in the war on “woke.”
The Employee Retirement Security Act of 1974 (ERISA) requires people who manage retirement investments to act in the best interests of their participants. This is a good thing! It means that fund managers can’t put their own financial interests first and must diversify a fund’s investments to minimize the risk of significant losses.
This lawsuit arose when a former pilot sued American Airlines in 2023, saying it violated ERISA by mismanaging 401(k) funds. Was it because somehow the company lined its pockets with the hard-earned cash of retirees? Nope. Was it because the company’s 401(k) funds were performing terribly? Nope. It was because American Airlines hired BlackRock, the world’s largest asset manager that oversees trillions of investment dollars, to manage its retirement funds.
Several years ago, BlackRock started positioning itself as a leader in its focus on environmental sustainability in investing. In 2021, BlackRock, then the second-largest holder of Exxon stock, cast a proxy vote on behalf of activist investors who wanted climate-conscious directors on the corporation’s board.
Lest this make it sound like BlackRock was just one step away from partnering with Greta Thunberg or something, the company still has billions invested in fossil fuels and runs the world’s largest Bitcoin fund. It’s a fund manager, not Santa Claus. BlackRock also spent the last year retreating from its previous support for climate activism, which is unsurprising given that 11 red states recently sued over it.
The usual suspects, like Florida, Louisiana, and Texas, have also pulled state assets out of BlackRock, but the American Airlines lawsuit was the first successful attack on ESG investing in 401(k) plans.
But it won’t be the last.
What O’Connor’s decision functionally does is say that investments that factor in ESG concerns are a breach of a fund manager’s duty, regardless of whether there’s a financial loss. The mere whiff of displaying a vague consciousness about the planet is simply too much to bear.
To be perfectly clear, this lawsuit likely wasn’t necessary to kneecap ESG investing—Donald Trump’s imminent return to the White House has already taken care of much of that.
Banks and fund managers have spent the last eight weeks fleeing Net Zero Asset Managers (NZAM). In this initiative, they had originally committed to supporting net zero greenhouse gas emissions by 2050. BlackRock was one of the last to leave. NZAM has since suspended all activities and is removing the name of every company that signed on to the initiative from its website, even taking down the commitment statement itself.
Labor Secretary Eugene Scalia of Trump’s first administration pushed through a rule that barred plan advisers from considering ESG concerns. The Biden administration reversed the rule in 2022, but it’s certain to flip back during Trump’s second term.
As goes ESG, so goes DEI.
Big corporations were already throwing out diversity, equity, and inclusion initiatives even before Trump’s 2024 victory, in part thanks to the tirelessly homophobic efforts of former music video director-turned-conservative ghoul, Robby Starbuck.
Smaller companies have been under siege from Trump’s Deputy Policy Chief Stephen Miller, whose America First Legal likes to threaten to sue companies out of existence for having the temerity to do things like provide modest grants to Black-owned small businesses.
So far in 2025, McDonald’s has hastened to roll back some DEI practices, saying it would be conducting a “civil rights audit,” whatever that means. But the reward for the most cringeworthy yet somehow entirely predictable retreat from DEI definitely goes to Mark Zuckerberg, whose eagerness to suck up to Trump has led to nixing the DEI efforts that hurt no one but caused right-wingers to howl. Zuckerberg’s Meta had been providing tampons in women’s and men’s bathrooms so anyone who needed them would have access. But not anymore.
Conservatives are treating the elimination of ESG and DEI efforts as if the boot of government is finally off their backs, allowing corporations to finally unleash their true potential. But these sorts of actions—committing to net zero emissions and ensuring diversity and equity in the workforce—weren’t the scary, woke socialist ideas of Barack Obama, Joe Biden, or Nancy Pelosi. Rather, they’re actions that corporations took in an attempt to make themselves appear more attractive within a capitalist, free-market framework.
But conservatives are no longer interested in a free market—hence the screaming about “woke capitalism.” With Trump back in office, they’ll get to use the heavy hand of government to reward only the corporations that share Trump’s climate-denying, white supremacist, anti-trans views.
Should any companies be foolish enough to consider stewardship of the planet or the dignity of trans employees, judges like O’Connor and other Federalist Society favorites will likely stop them in their tracks. So much for “freedom.”
