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 company’s 401(k) plan was found to favor socially conscious goals over financial returns.

U.S. district judge rules American Airlines violated retirement investment laws by prioritizing socio-political outcomes over financial terms.

American Airlines Inc. violated federal law by filling its 401(k) plan with funds from investment companies that pursue environmental, social, and corporate governance goals, a Texas federal judge ruled Friday in the biggest victory yet for opponents of the strategy.

This was the first challenge to a DC plan sponsor’s use of environmental, social and governance principles, and the judge’s ruling adds to the efforts by certain politicians and legislatures to claim ESG principles adversely affect retirement plan investments.

NR has reached out to American Airlines for comment. BlackRock routinely points to high returns on its ESG products and its client satisfaction in response to criticism of its inv