- Watch The JD Rucker Show every day to be truly informed.
(Zero Hedge)—In a major, first-of-its-kind milestone along ESG’s relentless march to its grave, a federal court has ruled that American Airlines breached its duty to employees by tapping ESG-addled BlackRock to manage part of its 401(k) plan.
“The facts here compellingly established fiduciary misconduct in the form of conflicts of interest and the failure to loyally act solely in the Plan’s best financial interests,” wrote US District Judge Reed O’Connor in a ruling that followed a four-day bench trial in June 2024. That duty of loyalty is imposed by the Employee Retirement Income Security Act (ERISA).
The ruling is certain to set off alarms in general counsel offices and boardrooms across America. For starters, 401(k) plans at 60% of Fortune 100 employers contain BlackRock investments, and BlackRock manages a huge chunk of the federal government’s Thrift Savings Plan. Of course, BlackRock isn’t the only asset manager whose ESG problem could become an employer’s problem.
Notably, the American Airlines plan didn’t offer any explicitly-ESG investment options. The issue was BlackRock’s intrinsically ESG-oriented management of all its funds. “This is not about ESG funds at all,” Josh Lichtenstein of law firm Ropes & Gray told the Financial Times. “This, to me, looks like the same claim could be brought against literally any 401k plan in America.”
With former pilot Bryan Spence as lead plaintiff of upwards of 100,000 participants, the class action suit accused American Airlines and its employee benefits committee of choosing investment managers that “pursue leftist political agendas” — sacrificing investment returns in favor of woke environmental, social and governance (ESG) goals like promoting workplace diversity or decreasing the use of fossil fuels.
While BlackRock wasn’t a defendant, the $11.5 trillion behemoth was nonetheless front and center in the case. To make the case that BlackRock’s priorities were warped, O’Connor quoted liberally from CEO Larry Fink himself, including his 2018 threat that companies must “contribute to society . . . or risk losing the support of the world’s largest asset manager.”
“BlackRock’s ESG influence is evident throughout administration of the Plan,” wrote O’Connor, a George W. Bush appointee, who credited claims that ESG takes a steep toll on returns: “By focusing on non-pecuniary interests, ESG investments often underperform traditional investments by approximately 10%.”
Given its enormous size, BlackRock also has the power to reduce the profitability of the companies it holds shares in — by voting its shares in ways that are detrimental to the bottom line. Among several examples, the plaintiffs pointed to Blackrock’s infamous 2021 ExxonMobil proxy vote — in which the firm helped secure two board seats for activist investor “Engine No. 1,” with the goal of pressuring the fossil fuel company to reduce its emphasis on fossil fuels and to commit to fighting “climate change.” At the time, BlackRock was ExxonMobil’s second-largest shareholder.
Characterizing American’s relationship with BlackRock as “incestuous,” O’Connor noted that BlackRock is simultaneously the largest investment manager of American’s 401(k) plan, one of American’s largest shareholders, and financier of $400 million of the company’s debt: “It is no wonder Defendants repeatedly attempted to signal alignment with BlackRock.” Further making the case that American’s disloyalty to its employees may have been driven by BlackRock’s “outsized influence,” he wrote, “As a large company [that] consumes copious amount of fossil fuels, American was potentially susceptible to a proxy fight of its own by failing to comply with BlackRock’s climate-related demands.”
Here are a few more notable quotes from O’Connor’s 70-page ruling:
- “A pursuit of non-pecuniary interests, in whole or in part, was an end itself rather than as a means to some financial end…The evidence made clear that BlackRock wanted to play its part in combating perceived social ills by bolstering DEI and climate change initiatives.”
- “The belief that ESG considerations confer a license to ignore pecuniary benefits is mistaken. ERISA does not permit a fiduciary to pursue a non-pecuniary interest no matter how noble it might view the aim.”
- Despite widespread coverage of the ESG controversy, “Defendants utterly failed to loyally investigate BlackRock’s ESG investment activities.”
- “Plaintiff proved by a preponderance of the evidence that American disloyally acted with an intent to benefit a party other than Plan participants and in a manner that was not wholly focused on the best financial benefit to the Plan.”
A ruling on damages or another form of relief will come later. Though he ruled that American breached its duty of loyalty to plan participants, O’Connor concluded American did not breach the duty of prudence — because prudence is judged by prevailing industry standards, and the asset management industry is, for now, regrettably dominated by ESG-minded firms.
In December, O’Connor fired a shot at a different strain of wokeness. He tossed out a plea deal between the Justice Department and Boeing — because the Biden administration included a requirement that diversity should be a consideration in selecting a compliance monitor. “In a case of this magnitude, it is in the utmost interest of justice that the public is confident this monitor selection is done based solely on competency,” wrote O’Connor, whose court is in Fort Worth.
As evidenced by recent ZeroHedge headlines, the welcome ruling against ESG’s malign influence on workers’ wealth-building is just the latest in a string of victories over woke ideology in general:
- Meta Nukes DEI Program; “Morale For Queer Staff In Shitter”; Zuckerberg Joins Joe Rogan Podcast
- Another DEI-mino Falls: McDonald’s Latest To Bail On Diversity Goals
- ‘Fact-Checkers Too Politically-Biased’ – Zuckerberg Abandons Facebook Censorship For X-Like Community Notes
- Walmart Nukes DEI As Anti-Woke Crusader Robby Starbuck Sends “Shockwaves Across Corporate America”
- Celebrating The Death Of Woke And The Resurrection Of Common Sense
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
