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.

Berkshire coal plants emit more nitrogen oxide gases than any other coal-fired fleet in the country. Despite big investments in renewable energy, the company has resisted efforts by regulators to make coal plants cleaner.

Defined contribution plans using environmental, social and governance principles have suffered a setback and could face more litigation risk, following a Texas federal judge’s Jan. 10 ruling against American Airlines and its 401 (k) plan fiduciaries, some ERISA attorneys warn.

A federal judge ruled Friday that American Airlines violated its legal responsibilities in managing employees’ retirement assets by encouraging environmentally and socially responsible investing in its 401(k) plan.

A federal district court in Texas found that American Airlines prioritized ESG investment goals ahead of employees’ financial interests, violating its fiduciary duties under ERISA.

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.