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4/24/2025

The Elliott Management Maverick Waging War on Big Oil

Financial Times (04/24/25) Mourselas, Costas

John Pike had his target in his sights. The Elliott Management partner was facing off against the chief executive of Phillips 66 (PSX), the oil and gas giant in which he had built a $2.5bn stake, across a Manhattan meeting room. Over the course of an hour, the Texan company and its legion of defense advisers had a final chance to negotiate a truce with the world’s most feared activist hedge fund and avert the type of expensive proxy fight for which Pike was becoming known. They failed. Within 24 hours Elliott had launched one of the most aggressive activist campaigns the energy sector had seen in years with a full-blown proxy battle for four seats on Phillips 66’s board, nominating a slate of new directors. The fight underlines how even as rivals have switched to behind-the- scenes lobbying and Elliott itself has softened its style, Pike embodies the hedge fund’s “old aggressive style,” according to former colleagues. The firm’s campaigns had become increasingly “corporatized and mature,” said another person who has come up against Elliott several times. But even though it emphasized its collegial nature, Pike’s approach stood out, they said, calling him “a lone wolf inside of Elliott who wants to do things a different way." Under Pike, Elliott has taken a series of high-profile energy positions in recent months, seeking to guide the direction of blue-chip companies from BP (BP) in the UK to RWE (RWE) in Germany — as well as at Phillips 66 in the U.S. “If you look at the most interesting campaigns Elliott is running right now, they are all his,” said another person who has dealt with Pike in a number of situations. To those who have worked with him, Pike is considered one of Elliott’s shrewdest investors. A 22-year Elliott veteran, Pike oversees “global situational teams” with specific expertise in energy — as well as utilities, transportation, mining and insurance — and became an equity partner in 2022. Last year, he ascended to its powerful 12-person management committee. A college basketball player who grew up in southern California and later graduated from Yale Law School, Pike’s demeanor is calm and deliberate. He keeps a low profile: the only image of him online is from his nomination to the Phillips 66 board. “It’s not hard to change John’s mind, you just have to be right,” said Quentin Koffey, who worked with Pike for seven years before leaving Elliott and later setting up his own activist fund, Politan Capital Management. “He responds to well-reasoned analysis, and is neither provoked nor swayed by shallow campaign rhetoric or ad hominem attacks.” His investment record points to a more ruthless style. Since Pike first picked a fight with U.S. oil and gas group Hess in 2013, Elliott has invested at least $21.6bn in publicly traded energy companies, according to analysis by the Financial Times and data provider Def 14 Inc. Three of the four campaigns engaging major U.S. corporations in which Elliott has gone so far as to mail proxy materials to shareholders have been led by Pike. Since his battle with Hess, Pike has won 13 board seats across five companies in the energy sector alone. Elliott’s energy campaigns are linked by a common thread: the break-up of large energy conglomerates to refocus them on their core competencies. It routinely calls for asset divestments, as it did at Hess (HES), Suncor Energy (SU), and Marathon Petroleum (MPC). But another link is the firm’s opposition to traditional energy companies owning renewable businesses. Elliott has run one campaign where it supported greater renewables deployment, at a company called Evergy (EVRG) in 2020. The trend has been in the other direction, however. At NRG Energy (NRG) and BP, the activist has pushed for the offloading of renewable businesses — moves that align with the political leanings of Elliott’s founder, Paul Singer, according to people who know him. Others insist the campaigns have nothing to do with personal politics. One former Elliott employee said: “They believe the energy transition?.?.?.?is expensive and time-consuming.” A recent letter to investors said the “net zero” agenda imposed “massive costs” and acted as a “drag on growth." Until recently, this view went against the prevailing wind, where big fund managers encouraged oil majors to push further into renewables and reduce carbon emissions. But since Elliott’s large stake in BP became public in February, the UK oil major has already changed course. Its chair Helge Lund has announced plans to step down, the company has pledged to speed up its pivot away from renewables, and it has fast-tracked $20bn of asset divestments. It has also promised to increase investment in oil and gas by 25%. Elliott wants more. Earlier this week, the hedge fund upped its stake past 5%, and has told the UK energy company that it wants it to boost free cash flow to $20bn by 2027 by more aggressively controlling costs and capital expenditure, according to people familiar with discussions. Changing the course of the roughly £57bn oil major will be no mean feat. “In Europe, board changes are much more difficult,” said Christopher Kuplent, an analyst at Bank of America. “And if you look at the campaigns where [Elliott] have not been able to effect board changes, they have failed.” “BP is the lowest-quality supermajor oil company there is no quick fix,” said Per Lekander, managing partner at hedge fund Clean Energy Transition. Back at Phillips 66, Elliott’s 17-month campaign is reaching a denouement. Unless one side blinks, shareholders will next month choose between the four directors proposed by Elliott and the ones put up by Phillips 66 in a full-blown proxy vote: a Rubicon that Elliott has never crossed against a major U.S. corporation. Phillips 66 this week raised the stakes with a letter to shareholders accusing Elliott of being conflicted due to its pursuit of a rival, Citgo. Success for Elliott increases the likelihood of asset sales, including the company’s midstream business and its chemicals joint venture with Chevron, as well as a shake-up of the management team. Phillips 66 has been Pike’s most combustible campaign since he took on Hess, his maiden campaign in the energy sector that settled just hours before a shareholder vote. Although Elliott went quiet on Hess after just a year, the investor held on to its position there for the best part of a decade before finally cashing out. Taking the fight to Phillips 66 and BP may require the same patience. Rich Kruger, who was installed as Suncor Energy’s chief executive in 2023, a year after Elliott took a stake, said the activist sometimes gave voice to what other investors were thinking. Suncor’s shares gained as much as 41% from when the activist first unveiled its demands in April 2022 and their high in November last year. “I’ve had a lot of hallelujahs from my long-term shareholders about Elliott’s strategy,” he said. “Maybe they’re a little bit more patient and less aggressive than Elliott, but I think they look for the same outcomes.”

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4/23/2025

Third Point’s Dan Loeb Says He’s Sold Out of Nearly All of his ‘Magnificent 7’ Holdings

CNBC (04/23/25) Li, Yun

Third Point’s Dan Loeb revealed that he has dumped almost all of his positions in the so-called Magnificent 7 stocks after their huge run-up that’s been dented this year from the stock market tariff turmoil. “What we have done in the last few months is number one shifted away from those easy sale candidates of stocks that had been the big winners but that are the easiest to sell from a technical standpoint from people who are repatriating their capital and getting out,” Loeb said while at the Economic Club of New York Tuesday. “We sold out of our Mag 7 holdings. Early on we got out of Meta (META), and reduced our Amazon (AMZN). We got out of basically all of them. I still have a small Amazon position. I think as a strategy what we’re looking at is event-driven strategies and activism,” Loeb said. The Magnificent 7 — Amazon, Microsoft (MSFT), Meta, Alphabet (GOOG), Apple (AAPL), Nvidia (NVDA), and Tesla (TSLA) — has led the market drawdown in 2025 after a two-year monster run. Tesla has been the worst performer this year, down more than 40%, while Amazon, Alphabet, and Apple have all declined about 20%. Concern about AI overspending hit the stocks initially this year, followed by tariffs from President Donald Trump causing investors to further reduce exposure to the names. The popular hedge fund manager said he’s leaning further into credit, especially private credit where he sees “massive” opportunities. Loeb also opined on the recent market turmoil triggered by Trump. He said the sentiment on Wall Street has switched from a sense of optimism at the start of Trump’s term to a feeling of uncertainty and fear of its potential lasting impact. “I think there will be a residual concern about some of the capriciousness with which some of these issues have been dealt with and confidence in the rule of law, in expectations being met,” Loeb said. Last year, Loeb said investments in the “physical world” were attractive as market narrative was dominated by Mag 7 stocks. He gave examples such as aggregates, nuclear power, life science tools, specialty alloy manufacturers, and commercial aerospace manufacturers.

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4/23/2025

U.S. Market Tumult Driving Clients to Europe, ‘Further Afield,’ Neuberger Chief Says

Semafor (04/23/25) Goswami, Rohan

U.S. market tumult — driven by tariffs, policy gyrations, and threats to the Federal Reserve’s independence — is pushing investors “further afield” to Europe and globally, Neuberger Berman CEO George Walker said at Semafor’s World Economy Summit. “The dialogue around American exceptionalism can return when there’s greater certainty with regards to policy,” Walker said. In the interim, clients are beginning to focus on investment opportunities in regions perceived as relatively more stable, the chief of the $515 billion-asset manager said. The lack of regulatory clarity — “it’s a spectacularly challenging period,” Walker remarked — is frustrating to both investors and executives. “Sell America” has begun to take hold more broadly on Wall Street, as previously sacrosanct ideas about U.S. assets have come under threat as a result of the Trump administration’s shifting policies. “I think it could end up being a real positive for Europe that you’ll see, particularly in Germany,” Walker said. The S&P 500 is down roughly 7% year-to-date, widely lagging European indexes. The modern Neuberger was born in the wake of the global financial crisis — one of the crown jewels of Lehman’s troubled portfolio — and has managed to grow its managed assets at a steady clip over the last decade. It is an “active” manager — a stock picker — and it has garnered influence as activist investors have come to dominate boardroom discussions. Winning support from Neuberger can make or break an activist investor’s campaign. The boundary-less pools of money that defined finance in the last 20 years are retreating, and capital is becoming a national resource to be protected. Public and private markets seem set to converge: Where they meet — and which firms stake out territory — could determine finance’s winners over the next decade.

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4/23/2025

Business Roundtable Calls for Bold Reform of the Corporate Proxy Process in New White Paper

Business Roundtable (04/23/2025)

Business Roundtable released a new white paper, “The Need for Bold Proxy Process Reforms,” urging swift action to modernize outdated rules, enhance oversight of proxy advisory firms and realign the proxy process with the long-term interests of shareholders. In recent years, activist investors — often holding minimal financial stakes — have increasingly used the proxy process to promote public policy agendas unrelated to company performance. This shift has transformed proxy statements into battlegrounds for contentious social debates, drawing companies away from their strategic priorities and undermining the intended function of shareholder engagement. At the same time, businesses face a regulatory process at the Securities and Exchange Commission (SEC) that has become inconsistent, opaque and unpredictable — raising compliance costs and exposing public companies to new risks, ultimately harming Main Street investors and weakening confidence in U.S. capital markets. “The shareholder proposal process was intended to foster constructive engagement between investors and companies in support of long-term value,” said Kristen Silverberg, Business Roundtable President & COO. “Today, it too often serves as a platform for ideological agendas unrelated to the company’s long-term performance.” The white paper also examines the growing influence of proxy advisory firms, which wield significant power over corporate governance decisions while operating with minimal regulatory oversight. Despite their outsized impact on vote outcomes, these firms — together forming a foreign-owned duopoly — remain largely unaccountable for conflicts of interest, factual errors, and one-size-fits-all recommendations that often ignore company-specific circumstances and lack any underlying economic analysis. In doing so, they undermine the discretion of independent boards with fiduciary duties to shareholders and effectively disenfranchise investors by imposing de facto supermajority requirements on certain matters. In “The Need for Bold Proxy Process Reforms,” Business Roundtable puts forward a set of targeted policy recommendations, including restoring Rule 14a-8 to its original intent by precluding shareholder proposals that advance broad ideological agendas; preventing the abuse of proxy rules through strengthened submission and resubmission thresholds for shareholder proposals; reining in the outsized influence of proxy advisory firms by prohibiting “robovoting” (the practice of mechanically voting in line with proxy advisor recommendations), requiring vote recommendations to be supported by economic analysis and addressing conflicts of interest; and affirming the SEC’s authority to regulate proxy advisory firms and enforce standards for transparency and accountability. Business Roundtable urges both Congress and the SEC to act swiftly. While the SEC’s recent rescission of Staff Legal Bulletin No. 14L represents a step toward restoring balance, the current system remains deeply flawed. Broader structural reform is necessary to protect investors and ensure that the U.S. capital markets continue to serve as a driver of economic opportunity and growth.

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4/21/2025

Opinion: Palliser Uses 'Independent journalist’ in Engagement with Rio Tinto

Australian Financial Review (04/21/25) Wootton, Hannah

Australian Financial Review columnist Hannah Wootton notes that in London, activist hedge fund Palliser Capital’s "fuzzy treatment of some pretty basic English words continues to feature in its campaign for Rio Tinto’s (RTNTF) dual-listing unification." Palliser Capital has introduced a shareholder resolution calling for Rio’s board to review (and ultimately collapse) its current dual-company structure. Shareholders of the British arm voted earlier this month, and their Australian counterparts are set to on May 1. Rio's board led by chairman Dominic Barton, chief executive Jakob Stausholm and major super investors are all stridently against the proposal. "It's a big decision," notes Wootton, "both for Rio in a governance sense and for shareholders given the tax implications. So it's one where accuracy matters. Yet the definition of 'opinion' has proved murky in the Palliser camp, which is led by chief investment officer James Smith, after third-party investment outfit Hannam & Partners released a report late last month calling for Rio's unification." Wootton asserts that "what Hannam & Partners failed to adequately disclose when providing this supposedly independently formed opinion (except in the finest of print) was that Palliser was footing the bill." She claims a "woolly approach to language again reared its head last Wednesday in a webinar Palliser held for Australian shareholders to discuss Resolution 21. It kicked off with moderator Annabel Murphy introducing herself as an independent journalist before she interviewed Smith. Murphy is a freelancer who does commercial content for news agencies and public relations work. This is totally legitimate work and she should be paid for it (whether that came as cash from Palliser or exposure for her corporate comms work to shareholders is unclear), but pitching something as an interview with an independent journalist sure sounds like it won't be biased." According to Wootton, what followed was a series of soft questions, and some confusion on Murphy's part over whether Rio's institutional shareholders could vote for the resolution or not. The interview topics were paired with a Palliser slideshow. "In the webinar, Smith even compared another of Palliser's 'independent' reports into the unification, which this time was produced by consultancy and advisory firm Grant Thornton, to a review done by Grant Samuel on BHP's dual-class unification in 2022," Wootton adds. The Grant Thornton report into Rio was pro-unification and released in March. But the firm conceded that it did not have access to all the information it needed to comprehensively analyze the consequences of such a move. Its report was dependent on what Palliser provided to them. "In contrast," suggests Wootton, "the Samuel assessment had full access to BHP's books, helped by the fact that, unlike Rio's saga, its board was in favor of unifying." A Palliser spokesman pointed out that the Grant Thorton report is clearly marked as commissioned by Palliser. He said shareholders should be “allowed independent and published information to make up their own minds.” "Not that Rio is doing much better," concludes Wootton. "Its latest attempt to engage with shareholders online about the unification is a two-and-a-half minute slideshow on YouTube entitled 'Dual-listed companies (DLC) structure.' Can't imagine why it's only clocked 140 views in five days."

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4/21/2025

Why Southwest Airlines' Stock Has Outperformed Other Carriers

Simple Flying (04/21/25) Mitchell, Alexander

Southwest Airlines (LUV) has had a bit of a rough go over the past three years. Following an operational meltdown in 2022 that hamstrung the airline for months and led to extensive financial losses, the carrier has been one step behind its major competitors for years now. Last summer, the matter worsened significantly when Elliott Management began to publicly engage the carrier’s management into changing its ways. Investors, who had previously maintained extremely bearish expectations for the carrier, have been pleasantly surprised by the carrier’s performance in recent months, with the airline outperforming the industry and many of its competitors by a considerable margin. Despite broad economic uncertainty and continual fears of a recession mounting, Southwest Airlines has consistently returned higher profits to investors than many of its competitors over the past few months. Amid global economic uncertainty that resulted from Donald Trump’s trade war and increased geopolitical tensions in the Middle East and Eastern Europe, the aviation industry had one of its weakest quarters since the pandemic started the year. As a result, airlines adjusted their growth targets and lowered their earnings forecasts, maneuvers which resulted in a significant reduction in investor confidence in many major airlines. Over the past few months, major legacy carriers have gone from forecasting record earnings to expecting significantly faster growth over the next twelve months. Carriers like Delta Air Lines (DAL) and United Airlines (UAL) both had stocks trading at post-pandemic highs, and even the problem-struck American Airlines (AAL) was looking like it had now found a way to consistently turn a profit. Since early February, all of these carriers’ stocks have taken a significant tumble, with all falling by more than 30%. Some airlines, including multiple major low-cost carriers, have seen share prices fall by numbers exceeding 40%, and bankrupt Spirit Airlines even had its stock delisted from major exchanges as a result. Southwest Airlines has, by contrast, actually had quite a different trajectory. The airline has been able to mitigate many of the impacts of this period of economic uncertainty, or at least investors seem to believe it has. Southwest Airlines' shares have only declined around 15% in value since the start of February, making it one of the few major airlines to return losses to investors of less than 20%. While roughly 15% losses may not seem that appealing to the average retail investor, the carrier’s ability to exceed expectations has led it to perform significantly better than its principal competitors. Southwest has been able to achieve this performance by changing dramatically. Since coming under the influence of Elliott Management, Southwest Airlines has changed significantly. Last year, the activist investment manager began to buy up shares in the airline until it had enough of an interest (exceeding 10%) that it could officially call an emergency meeting of shareholders. This allowed the activist investment manager to place significant pressure on the carrier, with many of the airline’s management decisions being at the core of Elliott’s complaints. Eventually, the two parties were able to completely settle their differences, with the airline agreeing to appoint five new Elliott-approved board members to positions of power. Furthermore, the carrier elected to appoint Rakesh Gangwal, the reputable entrepreneur who launched Indian low-cost giant IndiGo, as the airline’s new chairman. These moves significantly changed the leadership and management team at Southwest Airlines, which had previously consisted mostly of long-term company veterans. This new board has shifted the company’s overall sentiment and corporate identity in a few key ways. The airline, which had historically been customer and employee-oriented, has now become financially results-oriented like most of its other competitors. The airline’s latest moves have eliminated traditional practices, which confirmed the carrier as one of the most employee-oriented in the market. Despite the potential unpopularity of these moves, it is safe to say that they certainly have had their impact on the airline’s bottom line and how others view the carrier. Southwest Airlines has historically had two major customer benefits that were long seen as core to its brand. The first of these was its iconic “Bags Fly Free” policy, which allowed all passengers on all kinds of tickets two free checked bags to any destination. The carrier has now decided that it will be eliminating this benefit this upcoming May, a move which has been met with extensive passenger displeasure. However, the bag fees that the airline will soon be charging could generate millions in additional revenue every single day, something which could help the carrier improve its profitability picture. Time will have to tell whether this kind of move is going to have a significant impact on Southwest’s ability to retain passengers. In the short run, however, financial analysts are certainly excited about the prospect of having the carrier generate consistently higher revenues. In the eyes of Southwest’s new management team, there is no reason for an airline to offer passengers two free checked bags when none of its competitors offer one free checked bag, let alone two. Furthermore, this move demonstrates the carrier’s belief that if passengers are going to check bags anyway when flying, they will likely be willing to pay for it regardless. In addition, passengers with elite status and certain Southwest Airlines credit cards will also still be eligible for these benefits. Over the past few months, the airline has also made some moves to demonstrate its commitment to organizational restructuring. Not only has the carrier decided to enforce a new rule that corporate bonuses for executives must be approved by shareholders, but it has also executed its first mass layoffs in its history, firing a large portion of its corporate workforce. The airline has no intention of abandoning its path towards growth, however. The carrier has not fired any operational staff and has continued to launch new flights, despite its challenges, a move which has certainly inspired market confidence. For example, the carrier decided to open a massive new crew training base in Denver, demonstrating its commitment to expansion at key operating bases. Southwest now wants to grow, and it will be doing that in a much less customer and employee-oriented manner, something which the market has certainly been quick to see in a positive light.

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4/16/2025

BP’s Strategy Reset Under Pressure After Oil’s Plunge to $65

Bloomberg (04/16/25) Ferman, Mitchell; Nair, Dinesh

BP Plc’s (BP) big strategy reset is less than two months old, but the foundations of the company’s pivot back to oil are already starting to look shaky. After years of under-performance, the struggling major made a series of financial pledges in February intended to assure investors that dividends and share buybacks — a core part of the industry’s appeal — would be secure for years to come. Yet one key requirement in targets for boosting cash flow and improving returns was an oil price of $70 a barrel. Brent crude, the international benchmark, plunged below that level last week after U.S. President Donald Trump launched his trade war and OPEC+ agreed to raise production by more than expected. Oil is near $64 a barrel in London and influential forecasters say this price, or even lower, could be the new normal for markets this year and next. “They’re facing an environment where oil prices look skewed to the downside,” said Morningstar analyst Allen Good. While peers such as Shell Plc (SHEL) look well placed to withstand a slump, BP is “in a particularly precarious position.” BP sells more than just crude oil, and its targets are also based on prices of natural gas and refined fuels that have seen less price volatility than Brent, but the financial impact of recent market gyrations is large. By the company’s own estimates, each $1 drop in oil prices wipes an estimated $340 million from pretax profit. Analysts are questioning whether the company can maintain share buybacks, while a prolonged oil industry slump would complicate its plan to curb debt with $20 billion of asset sales. Meanwhile, Elliott Investment Management remains among the company’s largest shareholders, pressing management to make bolder changes. The “recent financial downturn makes delivery of the steps needed to restore investor confidence more difficult,” according to analysts at UBS Group AG. The bank downgraded BP to neutral this month, arguing that less heavily indebted rivals are better placed to handle the downturn. BP’s leadership team will face investors on Thursday at the company’s annual general meeting in London, and Chairman Helge Lund and Chief Executive Officer Murray Auchincloss are set to hear some pointed criticism. Legal & General Group Plc, a top-10 investor in the oil major, has already announced its intention to vote against the reelection of Lund. It will be a symbolic protest since the Norwegian, seen as a key backer of BP’s previous failed strategy, already announced his intention to step down from the position “in due course.” But it’s indicative of the continuing disquiet among shareholders. The asset manager is “deeply concerned by the recent substantive revisions made to the company’s strategy” and the impact on climate commitments, according to a post on its website. The departure of Lund, who is also chairman of weight-loss drugmaker Novo Nordisk A/S, should “follow a clearer and swifter timeframe than that currently posited by the company,” Legal & General said. Elliott has considered making a push for major changes in the company’s management, people familiar with the matter have said. However, the activist so far hasn’t gone public with its criticisms of BP. Since BP announced a strategic review of its lubricants business Castrol, Goldman Sachs Group Inc. has started running a sales process for the unit, said people familiar with the matter. The company was aiming for a valuation of about $10 billion, but unless the current market improves it could fetch as little as $6 billion to $7 billion, the people said, asking not to be named because the information is private. BP is also seeking to sell 50% of solar developer Lightsource, the people said. Divestitures of non-core business are vital for bringing down “BP’s uncomfortably high net debt and leverage,” said Bloomberg Intelligence analyst Will Hares. After the lukewarm reception for the strategy reset, BP CEO Auchincloss said he was confident that “weeks and months” of steady execution of his plans would win investors over. Yet with Trump’s tariffs roiling the global economy, OPEC+’s internal squabbles deepening an oil supply glut, and Wall Street slashing its price forecasts, time may not be the ally that he had hoped. “The problem BP has is they’re now two years behind everyone,” said Morningstar’s Good. The company’s rivals paid down debt when oil prices were high after Russia’s invasion of Ukraine, but is trying to get its balance sheet in order at a much more difficult time, just as the market cycle turns bearish, he said.

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4/15/2025

Large Institutional Investors Still Care About DEI

Barron's (04/15/25) Walker, Danielle

In early January, McDonald’s (MCD) announced it would be ending many of its diversity, equity, and inclusion initiatives. As part of the changes, the company said it would stop its practice of “setting aspirational representation goals” for its workforce and retire a program encouraging its suppliers to take a DEI pledge. Additionally, McDonald’s said it would stop referring to its diversity team as such, and instead call it the “Global Inclusion Team.” The changes at McDonald’s came after a 2023 Supreme Court ruling against affirmative action in Harvard’s admissions process, which had a chilling effect on corporate DEI initiatives. More recently, companies have had to contend with the Trump administration’s anti-DEI executive orders targeting federal agencies and the private sector. (Some groups quickly pushed against the executives orders with lawsuits, including the city of Baltimore, the National Urban League, the National Fair Housing Alliance, and groups representing professors, restaurant workers and chief diversity officers.) Despite these shifts affecting the legal landscape for corporate DEI, large corporations that have reversed course on their diversity initiatives aren’t necessarily in the clear. The big money—large shareholders like pension funds and other institutional investors—aren’t all staging a retreat. In fact, many of these investors (which often have investment horizons spanning decades) see companies’ diversity, equity, and inclusion practices as aiding their long-term competitive performance. Many shareholder proxy votes have also affirmed keeping DEI policies in place because investors see them as improving long-term performance. In recent months, shareholders at Costco (COST), Apple (AAPL), and John Deere (DE) voted against anti-DEI proposals by wide margins. A recent survey by investment consulting firm Cambridge Associates found that most institutional investors don’t see changing attitudes about DEI as affecting their approach to sustainability and impact investing. In February, Cambridge Associates released the survey, which queried foundations, colleges and universities, cultural and research institutions, religious institutions, independent schools, pensions, and hospitals. Among 251 respondents who were surveyed last year, 95% of investors said that anti-DEI or anti-ESG sentiment, and/or related legislation, had not affected their sustainability and impact investing strategy. Eye on McDonald’s. Just two days after McDonald’s announcement, one of the fast-food chain’s shareholders, the California State Teachers’ Retirement System, raised the issue at its board meeting. “So they’re talking about changing their language,” Calstrs portfolio manager Lynn Paquin said at the pension fund’s Jan. 8 investment meeting while updating the board on McDonald’s revised DEI initiatives. Calstrs, the second-largest public pension fund in the country, held 1.2 million shares of McDonald’s stock, which were valued at around $300 million as of June 30, 2024, according to public disclosures by the pension fund. “I think all of this is coming down to how they talk about things,” Paquin said of McDonald’s DEI changes. “I think that they recognize there have been benefits to their workforce and their productivity. So they don’t want to end it.” “But, they’re not going to be as public facing, in many cases, [like by] sponsoring certain community events. But they will continue to offer the training, inclusion programs [and] diversity programs to their workforce. And they will continue to report on that,” Paquin said. In its January email to employees, franchise owners and suppliers, McDonald’s CEO Chris Kempczinski and other senior leaders said the company would continue to annually report demographic information about its board, employees, and suppliers.

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