Costco is facing a shareholder proposal that calls for an evaluation of the business risks associated with its diversity, equity, and inclusion (DEI) programs. The company's board of directors is recommending shareholders reject the proposal, arguing that their commitment to DEI is essential and that the requested report wouldn't provide meaningful insights.
Costco is resisting a shareholder proposal that calls for an evaluation of the potential business risks associated with its diversity, equity, and inclusion ( DEI ) practices. The proposal was set to be voted on during the company's annual meeting on Thursday, a time when many U.S. companies are scaling back their DEI initiatives.
The National Center for Public Policy Research, a conservative think tank based in Washington, submitted the proposal, arguing that Costco's DEI efforts expose the company to 'litigation, reputational and financial risks to the company, and therefore financial risks to shareholders.' The think tank, which has made a similar proposal to Apple, points to a U.S. Supreme Court decision in July 2023 that outlawed affirmative action in college admissions as justification. However, Costco's board of directors voted unanimously to recommend that shareholders reject the motion. The board maintains that 'our commitment to an enterprise rooted in respect and inclusion is appropriate and necessary. The report requested by this proposal would not provide meaningful additional information.' The board emphasized that diverse employees and suppliers have fostered 'creativity and innovation in the merchandise and services that we offer' and led to greater customer satisfaction among Costco members. While Costco officials declined to comment on the DEI proposal, Neil Saunders, managing director of consulting firm GlobalData's retail division, told the Associated Press that Costco can be confident in the proposal's rejection. Saunders stated, 'I think people generally have confidence in Costco’s management, and there's an attitude of ‘Why rock the boat? It's sailing very nicely.'' This stance by Costco contrasts with recent moves by other major consumer brands, such as Walmart, McDonald's, and John Deere, which have scaled back their DEI policies. Last week, over 30 Walmart shareholders, including Amalgamated Bank and Oxfam America, urged the CEO of the nation's largest retailer to explain the business impact of these policy changes, calling the move 'disheartening.' Prominent technology companies, including Amazon and Meta, have also rolled back DEI initiatives, anticipating opposition from the administration of President Donald Trump. Conservative groups have gained momentum in challenging DEI programs, filing lawsuits against corporations citing similar arguments to those used in the Supreme Court affirmative action case. These legal actions have targeted initiatives like employee resource groups and hiring practices that prioritize historically marginalized groups. Adding to this trend, on Monday, Trump signed an executive order aimed at ending DEI programs within federal agencies. On Tuesday, his administration directed all federal DEI staff to be placed on paid leave and eventually be laid off. Trump has labeled these programs 'discrimination' and insists on restoring strictly 'merit-based' hiring practices
Costco DEI Shareholder Proposal Diversity Equity Inclusion Business Risks Conservative Think Tank Supreme Court Affirmative Action Donald Trump
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