Costco is facing pushback from a conservative think tank over its diversity, equity, and inclusion (DEI) initiatives. The National Center for Public Policy Research submitted a proposal urging Costco to evaluate any business risks posed by its DEI programs, citing potential litigation and reputational damage. However, Costco's board unanimously voted to reject the proposal, arguing that their commitment to DEI is essential and that the requested report would not provide meaningful information. This decision reflects Costco's stance in contrast to other companies that have scaled back or rolled back DEI initiatives.
Costco is resisting a shareholder proposal that urges the wholesale club giant to evaluate any business risks posed by its diversity, equity, and inclusion ( DEI ) practices. The National Center for Public Policy Research, a conservative think tank based in Washington, submitted the proposal, arguing that Costco 's DEI initiatives carry 'litigation, reputational and financial risks to the company, and therefore financial risks to shareholders.' Citing a U.S.
Supreme Court decision in July 2023 that outlawed affirmative action in college admissions, the think tank echoed similar proposals made to Apple and some American companies that have scaled back or retreated from their diversity policies. However, Costco's board of directors voted unanimously to ask shareholders to reject the motion. The board stated its belief 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 directors' message to shareholders highlights how having diverse employees and suppliers has, in their view, fostered 'creativity and innovation in the merchandise and services that we offer' and led to greater customer satisfaction among Costco members. Neil Saunders, managing director of consulting firm GlobalData's retail division, believes the proposal will be rejected, stating, '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.''Costco's public stance in support of DEI programs contrasts with the positions taken in recent months by other prominent consumer brands, including Walmart, McDonald's, and John Deere. Last week, over 30 Walmart shareholders, including Amalgamated Bank and Oxfam America, urged Walmart's CEO to explain the business impact of curbing the company's DEI policies, calling the move 'disheartening.' Technology companies like Amazon and Meta, the parent company of Facebook and Instagram, have also rolled back DEI initiatives, which are anticipated to face opposition from the administration of President Donald Trump. Emboldened by the Supreme Court's decision on affirmative action in higher education, conservative groups have filed lawsuits making similar arguments against corporations, targeting initiatives like employee resource groups and hiring practices that prioritize historically marginalized groups. Conservatives have long condemned these initiatives, arguing they violate the U.S. Constitution by considering factors such as race, gender, and sexual orientation. The National Center for Public Policy Research alleged that at least 200,000 of Costco's 300,000 employees worldwide 'are potentially victims of this type of illegal discrimination because they are white, Asian, male or straight.' The center stated that if only a fraction of those employees were to sue Costco, the legal costs could be substantial. Costco has a chief diversity officer, but the company's executive ranks do not reflect the diversity of its customers. Nearly 81% of the executives Costco had in place last year were white, and 72% of them were men, according to data published on its website. Saunders noted that members of Costco's management team typically stay a long time given the company's solid and stable financial performance. In other aspects, Costco has been a bit of a maverick in the corporate world. It lacks an official corporate public relations team and hasn't focused on building up its online business as much as rivals Walmart and Target. The National Center for Public Policy Research intends to present a proposal at Apple's Feb. 25 shareholder meeting that goes beyond its demands for Costco. The center's resolution calls for Apple to abolish its inclusion and equity department, policies, and goals, characterizing them as 'consistent with, if not more radical than, most corporate DEI programs.' Apple's board wants shareholders to vote down the proposal, stating that the company strives 'to create a culture of belonging where everyone can do their best work.
Costco Diversity Equity Inclusion DEI Shareholder Proposal National Center For Public Policy Research Affirmative Action Business Risks Corporate Governance
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