By Ary Rosenbaum
The ERISA world never runs out of courtroom drama, and the latest episode comes courtesy of Seidman v. American Airlines. The court ruled that while the plaintiffs may have alleged fiduciary breaches tied to ESG (environmental, social, and governance) investment choices, there was no proof of monetary harm, and without financial loss, there would be no financial recovery.
That’s not a “get out of jail free” card. It’s more like a warning label. The court didn’t bless ESG investing as a fiduciary practice; it just said, “show me the money.”
Here’s what matters for plan sponsors and fiduciaries.
1. No Damages Doesn’t Mean No Risk
Just because the court didn’t order American Airlines to pay up doesn’t mean other sponsors are safe. The case underscores how process remains the bedrock of fiduciary duty. Whether your plan lineup includes ESG options or not, document everything. The “why” matters more than the “what.” A well-reasoned investment process beats a well-intentioned one every time.
2. ESG Still Isn’t a Free Pass
ESG investing isn’t the problem, using it as a marketing gimmick or political statement is. ERISA doesn’t prohibit ESG considerations, but it doesn’t let fiduciaries prioritize them above returns, either. If you’re picking funds based on social objectives rather than economic merit, you’re playing fiduciary roulette.
3. The “No Monetary Harm” Defense Is a Temporary Shield
In this case, the plaintiffs couldn’t prove that ESG choices cost participants money. That’s a technical victory, not a philosophical one. Another case with stronger data could easily go the other way. Courts aren’t rejecting ESG-related fiduciary claims—they’re rejecting poorly framed ones.
4. Optics Still Matter
Even if you win in court, you may lose in reputation. Plan participants don’t want to hear that their retirement savings are a testing ground for corporate virtue signaling. They want fiduciaries who make investment decisions with their financial future in mind, not their social media image.
5. The Takeaway for Plan Sponsors
Stay grounded. ESG can coexist with fiduciary duty—but only if it’s tied to risk management, long-term value, and documented prudence. Avoid letting ideology drive investment policy. Courts may forgive a lack of damages, but they won’t forgive sloppy process.
In the end, Seidman v. American Airlines reminds us that ERISA isn’t about buzzwords or moral crusades, it’s about loyalty, prudence, and measurable outcomes. “No monetary harm” might get you out of this case, but it won’t get you out of your fiduciary responsibilities.
And as I tell every plan sponsor: you can’t always predict what a court will decide, but you can control your process. That’s the real ESG, Every Step Governed.
