Costco Wholesale Corporation is standing firm on its Diversity, Equity, and Inclusion (DEI) initiatives, rejecting a shareholder proposal that calls for an evaluation of the financial risks associated with its diversity policies.
The move comes as other major companies, including Walmart and Tractor Supply, have scaled back or abandoned their DEI programs under mounting legal and political pressure.
The shareholder proposal, submitted by the conservative think tank National Center for Public Policy Research, argues that Costco’s DEI efforts expose the company to legal and financial risks. The group cited the U.S. Supreme Court’s ruling in SFFA v. Harvard, which struck down race-based affirmative action in college admissions, as a potential precedent that could implicate corporate DEI programs.
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The proposal claims that Costco’s diversity policies could lead to lawsuits alleging “illegal discrimination” against employees who are “white, Asian, male, or straight.” It also highlights recent corporate trends, such as the elimination of DEI roles at companies like Meta, Zoom, and Tractor Supply, as evidence of increasing legal and financial scrutiny.
The proposal called for Costco’s board to evaluate and publish a report on the risks of maintaining its DEI goals and policies, including those under its recently rebranded “People & Communities” initiative.
Costco’s board of directors unanimously recommended a vote against the proposal, asserting that DEI policies are integral to the company’s success and aligned with its core values.
“Our diversity initiatives enhance employee satisfaction, attract talent, and contribute to our unique ‘treasure hunt’ shopping atmosphere,” the board said. “These efforts help us serve our increasingly diverse membership base and bring originality and creativity to our merchandise offerings.”
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Costco also rejected claims of legal impropriety, emphasizing its compliance with anti-discrimination laws and its regular review of policies to ensure legal alignment.
Costco’s stance sets it apart from several major corporations that have recently scaled back DEI efforts. Companies like Walmart and John Deere have faced pressure to roll back diversity initiatives due to mounting legal risks and backlash from conservative groups. For instance, Tractor Supply announced the elimination of DEI roles and goals earlier this year.
Despite this trend, Costco has doubled down on its commitment to diversity, arguing that it is critical for fostering innovation and meeting the expectations of its customers, employees, and shareholders.
The proposal comes amid a broader wave of challenges to corporate DEI programs. Conservative groups have increasingly targeted companies for diversity initiatives, framing them as “woke” policies that risk alienating employees and consumers. Activist shareholders like the National Center for Public Policy Research have spearheaded efforts to roll back these initiatives, citing legal and reputational risks.
READ: Walmart Joins Growing Trend Of Corporations Rolling Back DEI Initiatives
Costco’s board criticized the motivations behind the proposal, pointing to the think tank’s broader agenda of opposing DEI programs. The board referenced past statements from the group describing DEI as “politicized” and harmful to corporate governance.
As Costco prepares for its annual meeting, the vote on the proposal will serve as a litmus test for the company’s shareholders and their alignment with the board’s vision. The decision could also signal broader trends in corporate America’s approach to DEI amidst ongoing political and legal scrutiny.
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