Costco defends DEI policies even as others scale back
Costco is pushing back on a shareholder proposal that urges the wholesale club to evaluate any business risks posed by its diversity, equity and inclusion (DEI) practices.
Investors were expected to vote on the recommendation during the company's annual meeting Thursday. It comes as many other U.S. companies have scaled their DEI policies back.
Here’s what to know:
Costco pushes back on shareholder DEI review proposal
What we know:
The National Center for Public Policy Research, a conservative think tank based in Washington, submitted the proposal, arguing that Costco's DEI initiatives hold "litigation, reputational and financial risks to the company, and therefore financial risks to shareholders."
The think tank has made a similar proposal to Apple, and like some American companies that have already scaled back or retreated from their diversity policies, cited a U.S. Supreme Court decision in July 2023 that outlawed affirmative action in college admissions.
But Costco's board of directors voted unanimously to ask shareholders to reject the motion. The board said it believes "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 details 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.
What they're saying:
Costco officials could not be reached for comment on the DEI proposal. But Neil Saunders, managing director of consulting firm GlobalData's retail division, told the Associated Press that Costco can be confident the proposal will be rejected.
"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,'" Saunders said.
Companies scale back DEI programs
The backstory:
Costco's public stance in support of DEI programs contrasts with the positions taken in recent months by other big consumer brands, such as Walmart, McDonald's and John Deere.
Last week, more than 30 Walmart shareholders, including Amalgamated Bank and Oxfam America, asked the CEO of the nation's largest retailer to explain the business impact of curbing the company's DEI policies, a move they called "disheartening."
Prominent technology companies, including Amazon and Meta — the parent company of Facebook and Instagram — also have rolled back DEI initiatives, which are expected to face opposition from the administration of President Donald Trump.
Dig deeper:
Emboldened by the Supreme Court's decision on affirmative action at colleges and universities, conservative groups have filed lawsuits making similar arguments about corporations. They have targeted initiatives such as employee resource groups and hiring practices that prioritize historically marginalized groups.
Trump targets DEI policies and programs
Timeline:
On Monday, Trump signed an executive order aimed at terminating DEI programs within federal agencies. On Tuesday, his administration directed that all federal DEI staff be put on paid leave and eventually be laid off.
Trump has called the programs "discrimination" and insisted on restoring strictly "merit-based" hiring.
The Source: This story was reported using information based on Costco's board of directors. It was reported from Cincinnati, and the Associated Press contributed.