NEW YORK — Costco is resisting a shareholder initiative that calls for an assessment of potential business risks associated with its diversity, equity, and inclusion (DEI) practices. A vote on the proposal was anticipated to take place during the company’s annual meeting on Thursday.
The proposal was introduced by the National Center for Public Policy Research, a conservative think tank located in Washington. They argue that Costco’s DEI strategies pose “litigation, reputational, and financial risks to the company, and subsequently financial risks to its shareholders.” This think tank has previously submitted similar proposals to other major corporations, such as Apple. They referenced a U.S. Supreme Court ruling from July 2023 that abolished affirmative action in college admissions as part of their reasoning for the proposal.
Costco’s management was not available for comment regarding the DEI initiative. However, the board of directors expressed unanimous support for rejecting the motion. They stated that their dedication to an inclusive and respectful enterprise is both “appropriate and necessary,” asserting that the report requested by the proposal would not yield significant additional insights.
The directors emphasized that a diverse workforce and supplier base have stimulated “creativity and innovation” in the products and services offered by Costco, resulting in enhanced customer satisfaction among members.
Neil Saunders, managing director of GlobalData’s retail division, is confident that the proposal will not pass. He stated, “People generally trust Costco’s management, and there’s a sentiment of ‘Why disrupt what’s working well?’”
Costco’s affirmative position on DEI contrasts with decisions made recently by other large consumer brands such as Walmart, McDonald’s, and John Deere. Just last week, over 30 Walmart shareholders, including entities like Amalgamated Bank and Oxfam America, called upon the CEO to clarify how limiting the company’s DEI policies would impact business, expressing their discontent.
Several major technology firms like Amazon and Meta, the parent company of Facebook and Instagram, have also begun scaling back their DEI efforts, likely anticipating pushback from the current administration of President Trump.
The Supreme Court’s ruling on affirmative action has emboldened conservative organizations to file lawsuits challenging corporate initiatives similar to those aimed at fostering DEI. These lawsuits target programs like employee resource groups and hiring strategies that prioritize historically underrepresented groups. Recently, President Trump signed an executive order aimed at dismantling DEI programs across federal agencies. For many years, conservatives have criticized such programs, claiming they violate the U.S. Constitution by taking into account factors like race, gender, and sexual orientation.
The National Center for Public Policy Research has claimed that upwards of 200,000 of Costco’s approximately 300,000 global employees may be “victims” of illegal discrimination due to their race or gender. The group warned that if even a small fraction of these employees pursued legal action against Costco, the financial repercussions could be severe.
While Costco has a designated chief diversity officer, the company’s executive leadership does not accurately reflect the diversity of its customer base. Data from its website shows that around 81% of its executives were white, and 72% were men as of the previous year. Saunders noted that management members tend to remain with Costco for extended periods, attributing this to the company’s strong and stable fiscal performance.
In various respects, Costco has distinguished itself from other corporations. It does not maintain an official public relations team and has not concentrated as much on digital sales compared to competitors like Walmart and Target.
Looking ahead, the National Center for Public Policy Research aims to introduce a more extensive proposal at Apple’s shareholder meeting scheduled for February 25, which seeks the elimination of the company’s inclusion and equity department, as well as DEI policies and goals. Apple’s board plans to advocate against this proposal, stating that the company works to foster a culture of belonging where all employees can perform at their best.
