Last week’s first installment in this series documented the evidence that corporate America‘s celebrated retreat from diversity, equity and inclusion policies has been, in large part, a public relations exercise — a strategic rebranding designed to satisfy political pressure while preserving the underlying ideology.
This week, the question is: who is making sure that ideology stays in place?
The Colgate-Palmolive shareholder vote on May 8 provides the clearest window yet into the answer. NLPC’s Proposal 4 — asking the Board to stop selecting directors based on race, ethnicity, gender, sexual orientation, and gender identity — received 2.2% of the vote. Nearly 97% voted against it.
The institutions casting those votes are not passive bystanders. They are the architects of the system that keeps DEI alive in the boardrooms of corporate America, regardless of what any individual company says publicly about having moved on.
The Big Three’s Double Standard
Start with BlackRock — the world’s largest asset manager, with more than $14 trillion in assets under management, giving it voting power over more shares of more companies than any other institution on earth.
BlackRock’s messaging over the past year has emphasized its retreat from ESG-driven governance. CEO Larry Fink declared in his 2025 letter to investors that he would no longer use the term ESG. The firm dropped DEI language from its stewardship guidelines. The press coverage was favorable.
Then visit BlackRock’s own investor relations website, where the firm maintains a dedicated page titled “Board Diversity at BlackRock.” The page, live and active, states that the Board views racial and ethnic diversity among its members as “critical to the success of the Company,” touts six women on its 19-member board, and itemizes directors’ racial and ethnic self-identifications by category. One standard for the companies it lectures. Another for itself.
State Street has followed the same playbook. Its asset management arm, State Street Global Advisors, removed formal board diversity targets from its proxy voting guidelines in early 2025 — generating positive coverage for a purported retreat from DEI-driven governance. But as Charles Gasparino reported in the New York Post in December 2025, State Street was still using DEI to curry favor with leftist state officials who control hundreds of billions in pension money — marketing its DEI-friendly proxy voting frameworks specifically to Democratic-controlled public pension funds as a business development strategy.
Vanguard, the second-largest index fund manager with approximately $10 trillion in assets under management, has similarly retreated in public posture while its index funds — which must hold every stock in the index regardless of governance practices — continue to vote in ways that preserve the status quo at individual companies.
The Blue-State Pension Machine
The institutional investor story does not stop with the Big Three. Behind them sits a network of blue-state public pension funds whose proxy voting behavior is driven not by fiduciary calculations alone, but by the ideological priorities of the elected officials and political appointees who control them.
CalPERS — the California Public Employees’ Retirement System, with approximately $556 billion in assets — has been unambiguous. At a March 2025 board meeting, CalPERS representatives emphasized their ongoing commitment to DEI initiatives despite the broader industry retreat, and confirmed they would continue pressing portfolio companies on board diversity. The fund has voted against hundreds of director nominees at companies it deems insufficiently diverse.
The New York State Common Retirement Fund — the third-largest public pension fund in the United States at approximately $273 billion — operates under proxy voting guidelines that are among the most explicit in the country. Those guidelines require the fund to vote against all incumbent board nominees at companies with no directors identifying as an underrepresented minority, and against all nominating committee nominees at companies that do not list diversity as an explicit criterion in their director search. New York State Comptroller Thomas DiNapoli has filed shareholder proposals specifically seeking to improve corporate accountability for DEI at portfolio companies.
The New York City pension system — overseeing approximately $270 billion in assets — has operated under outgoing Comptroller Brad Lander as an engine for DEI-driven proxy voting. In February 2025, Lander organized what he called “Emerging Managers Week” — a multi-state initiative, attended by Al Sharpton, that brought together pension funds managing more than $1 trillion in assets to commit to investing with MWBE-owned asset managers. The explicit purpose: to defy the Trump Administration’s DEI rollback on behalf of public employees’ retirement assets.
What This Means for Every Shareholder
The combined voting power of BlackRock, Vanguard, State Street, CalPERS, CalSTRS, the New York State Common Retirement Fund, and the New York City pension system represents an enormous bloc of shares at virtually every major public company in America. When that bloc moves in unison on a governance question — as it did at Colgate on May 8 — the outcome is predetermined regardless of what individual investors, or even most institutional investors, might prefer.
This is not how shareholder democracy is supposed to work. Retail investors and smaller institutional shareholders who own Colgate stock — and who may have views about identity-based board selection that differ sharply from those of CalPERS or the New York City pension system — found their votes rendered effectively meaningless by a coordinated institutional voting bloc whose priorities are set in Sacramento and lower Manhattan.
The lesson from the Colgate vote is not that DEI has majority support among shareholders. It is that DEI has minority support among a very small number of institutions that hold a majority of the shares. That is a structural problem — and it will not be resolved by press releases about ESG retreats from firms that are simultaneously marketing their DEI-friendly proxy voting capabilities to blue-state pension officials.
