A federal judge in Texas has upheld a rule that permits the inclusion of sustainable investment options in retirement plans. The rule was adopted in 2022 under the administration of former president Joe Biden. However, 26 Republican-led states, including Texas, claimed it violated the 1974 Employee Retirement Income Security Act (ERISA) and undermined “key protections for retirement savings of 152 million workers”. In his opinion, Judge Matthew Kacsmaryk stated that the rule was not contrary to ERISA, and that any arguments contrary to this were “wooden textualism that courts should endeavor to avoid”. Kacsmaryk had previously rejected these arguments in a 2023 ruling, but a federal appeals court in July forced him to reconsider this decision. This followed the decision to scrap a piece of legislation, known as the Chevron doctrine, which had required courts to defer to regulatory agencies’ interpretation of federal legislation where such legislation was considered ambiguous. Last month, a separate court in Texas asserted that American Airlines breached its fiduciary duties when it chose BlackRock as an asset manager, allowing “corporate interests, as well as BlackRock’s ESG interests, to influence management of the plan”.
