CalPERS board evaluates DEI RFP amid changing legal landscape and fiduciary duties

In a pivotal meeting on April 15, 2025, the California Public Employees Retirement System (CalPERS) Board engaged in a critical discussion regarding the implications of diversity, equity, and inclusion (DEI) initiatives on their fiduciary responsibilities. The meeting highlighted the evolving legal landscape surrounding DEI practices, prompting board members to carefully consider the associated risks before proceeding with a motion to release a request for proposals (RFP) for a DEI consultant.

The conversation began with Trustee Willett advocating for the motion, emphasizing that DEI is integral to the board's fiduciary duty. However, Trustee Ortega raised concerns about the potential risks involved, particularly in light of recent changes in legislation and ongoing litigation related to DEI practices. Tiffany Reese, fiduciary counsel, underscored the uncertainty surrounding the legality of DEI initiatives, noting that over 160 cases are currently pending in federal courts. This shifting legal environment has created a complex backdrop for the board's decision-making process.

Trustee Ortega expressed the need for a thorough risk assessment before voting on the motion, questioning how the board could ensure that their actions would withstand potential legal challenges. The discussion revealed a consensus on the importance of understanding the totality of risks, including litigation and investment implications, before moving forward. Board members acknowledged that while the motion to release the RFP was crucial, it must be approached with caution given the current climate.

As the meeting progressed, it became clear that the board would benefit from a closed session to delve deeper into the litigation risks associated with DEI initiatives. This session would allow for a more comprehensive analysis of the potential challenges and help the board align their actions with their fiduciary duties and organizational values.

In conclusion, the CalPERS Board's deliberations on DEI initiatives reflect a broader concern about navigating the complexities of fiduciary responsibility in an uncertain legal landscape. The decision to potentially release the RFP for a DEI consultant will hinge on the insights gained from further discussions in closed session, emphasizing the board's commitment to making informed and responsible decisions for the benefit of its beneficiaries. The outcome of this meeting could have significant implications for CalPERS' approach to DEI and its overall investment strategy moving forward.