Ditching DEI in name only

So what’s in store for the 2025 proxy season? The Conference Board has a preview out this morning that predicts more pressure on boards, especially in sensitive areas like DEI and ESG. Companies such as Citigroup, Meta, PepsiCo, and Target have publicly rolled back their DEI efforts, which has spawned its own backlash. The Conference Board notes that there were 13 anti-DEI proposals at Russell 3000 companies in 2024 and 112 anti-ESG proposals. The number of shareholder activism campaigns have increased from 206 in 2021 to 411 last year, but support among shareholders dropped from 57% to 38%.

Conference Board CEO Steve Odland says that CEOs are telling him they’re deciding to ditch politically sensitive labels without shifting underlying policies. “The term DEI has now been infused with so much baggage that most companies are saying, let’s stop using the term and call it something else,” he says. “Don’t discriminate and don’t do quotas. Be careful how you talk about them so you don’t push an extremist button but don’t give up on what you’re trying to accomplish.”

Most of the leaders I speak to aren’t abandoning their desire to have a diverse, engaged workforce, nor are they ditching sustainability efforts to satisfy critics. But directors have a fiduciary duty to put their political beliefs aside when they enter a boardroom to focus on what’s good for the business and good for shareholders. Says Odland: “You can have a flaming red shirt or a flaming blue shirt, but when they’re talking about the business issues, there is fair consensus.”You can read the full Conference Board 2025 Proxy Season Preview here, which was done in cooperation with ESGAUGE, Russell Reynolds Associates, and The Rutgers Center for Corporate Governance.

More news below.

Contact CEO Daily via Diane Brady, diane.brady@fortune.com, LinkedIn.

Top news

German elections carry an anti-U.S. signal. Friedrich Merz’s Christian Democrats won the federal elections in Germany and will lead a new coalition government. Merz promised to “achieve independence” from the U.S. because President Trump is “largely indifferent” to Europe’s fortunes. “It must be an absolute priority to strengthen Europe as quickly as possible so that, step by step, we actually achieve independence from the USA,” he said.

What didn’t happen: The nationalist AfD party — supported by Elon Musk — came second and got just under 21% of the vote. But Merz immediately ruled out an alliance with the AfD. And although the result was an historic high for the far-right party it appears that Musk did not change the party’s predicted level of support.

Musk’s popularity declines. Multiple national polls have shown that more Americans disapprove of Musk and his policy moves than approve. In the most recent, 34% of respondents said they approved vs. 49% disapproving. Musk remains solidly popular among Republicans. Also, Trump’s ratings are dipping back into more normal territory for him: 27% strongly approve of him vs 39% who strongly disapprove.

Ukraine mineral deal. Kyiv is demanding more out of the U.S.’s proposed deal to end the war, which involves giving the U.S. rights over Ukraine’s mineral base but no military security guarantees against Russia. Lurking in the background: What if Putin doesn’t actually want an end to the war? 

Popewatch: The 88-year-old pontiff remains in critical condition and is now being treated for a kidney condition in addition to his lung infection. Context: Pope Francis only has one lung.

From Fortune

Shareholder activist on DEI rollbacks
In a recent interview with Fortune, shareholder activist Andrew Behar noted that “companies are actually holding strong” when it comes to keeping their DEI policies. “​​Anyone who’s looking at the data, which the companies are, comes to the conclusion that greater diversity leads to financial outperformance,” Behar said. Fortune

U.S. chipmakers warn of growing China industry
Following a recent string of disappointing earnings reports, chipmakers in the U.S. are warning that China’s chip industry is encroaching on their business. Chipmakers like Applied Materials and Lam research have both reported significant declines in their China revenue. Fortune

Nvidia CEO thinks investors panicked over DeepSeek
Nvidia CEO Jensen Huang believes that investors overestimated how much DeepSeek, the Chinese AI company that claims to use less-expensive chips than those produced by Nvidia, could affect demand for Nvidia’s products. The company has recovered most of the $600 billion in market value it lost in a related stock selloff, and Huang maintains that Nvidia will continue to be pivotal to the AI industry. Fortune

The markets

• The S&P 500 closed down 1.71% at 6,013.13 on Friday, one of the index’s worst days of the year. (It’s still up 2.24% YTD, however.) One of the worst performers was Coinbase, down 8.27%. S&P Futures contracts were up 0.51% this morning, pre-opening bell, however. Markets in Europe and Japan were up slightly this morning.

From the analysts

• Goldman Sachs on U.S. GDP: “...we expect above-consensus real GDP growth of 2.3% yoy in 2025 on a Q4/Q4 basis, reflecting continued healthy consumption growth supported by solid real income growth as well as strong residential and business fixed investment. We expect core PCE inflation to remain relatively steady this year and end the year at 2.6% … We expect the unemployment rate to stand at 4.0% by end-2025,” per Allison Nathan et al.
• Convera on the dollar: “The US dollar remains weak, likely due to two reasons: no new tariffs reducing safe-haven demand and the Fed's pause linked to rising inflation expectations rather than robust macro data. With this week’s data confirming these trends, the dollar has not benefited from steady rates; it's currently at its lowest level this year, down 3.4% since January's peak. Dollar bulls need either ongoing tariff enforcement by Trump or stronger macroeconomic data for a rebound,” per Boris Kovacevic.
• Wedbush on Palantir: “Karp & Co. are playing chess in the AI Arms Race while others play checkers and the bears continue to miss this generational tech story as they cannot find AI in their spreadsheets when in their hibernation caves,” per Daniel Ives et al.
• UBS on the “DOGE dividend” to taxpayers: “There is a considerable gulf between claimed government savings and economists’ view of reality. Refunding illusionary savings would be a deficit-financed stimulus check,” per Paul Donovan.

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