Associate Professor Jack Yoest was recently published in The Economic Standard.
The article argues that a recent federal court ruling in Spence v. American Airlines endangers the stability of employer-sponsored retirement plans at a critical time for U.S. retirement security. Despite American Airlines fulfilling its fiduciary duty of prudence under ERISA, the court found it violated the duty of loyalty solely because its investment manager, BlackRock, engaged in ESG-related activities with other clients, not because of any flaw in the company’s retirement offerings.
Critics argue that this ruling sets an unrealistic legal standard by requiring fiduciaries to monitor the unrelated business practices of third-party asset managers. If upheld, it could lead to increased litigation, discourage employers from offering retirement plans, reduce investment options, and raise workers' costs.
While the article acknowledges concerns over ESG investing, it warns against using fiduciary duty as a political weapon. It concludes by urging a reaffirmation of ERISA’s original intent: to protect participants through prudent and loyal financial management, not ideological policing.