Costco rejects efforts to eliminate DEI initiatives
Costco Wholesale Corp. has plans to hold a vote at its upcoming annual shareholders meeting that will decide the fate of the company’s diversity, equity and inclusion (DEI) initiatives.
National Center for Public Policy Research (NCPPR), a Washington D.C.-based conservative think tank, has submitted a shareholder proposal that Costco conduct an evaluation and publish a report on the risks of the company maintaining its current DEI roles, policies and goals. The group criticized Costco for possible “illegal discrimination” against employees who are “white, Asian, male or straight.”
As reported by Forbes, NCPPR supports its proposal by citing a 2023 lawsuit in which the plaintiff, a white woman, was awarded more than $28 million after arguing that she was fired because of her race. Based on this event, and citing other large companies that have eliminated DEI initiatives, NCPPR suggests that “DEI holds litigation, reputational and financial risks to the company, and therefore financial risks to shareholders.”
Costco’s board of directors is unanimously recommending a vote against NCPPR’s proposal and is standing firm on its DEI initiatives.
“Our success at Costco Wholesale has been built on service to our critical stakeholders: employees, members and suppliers,” Costco said in its proxy statement to investors.
Costco believes that its DEI efforts enhance its capacity to attract and retain employees who will help its business succeed.
“As our membership diversifies, we believe that serving it with a diverse group of employees enhances satisfaction,” said Costco. “Among other things, a diverse group of employees helps bring originality and creativity to our merchandise offerings, promoting the 'treasure hunt' that our customers value. That group also helps to provide insights into the tastes and preferences of our members. And we believe (and member feedback shows) that many of our members like to see themselves reflected in the people in our warehouses with whom they interact.”
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Costco also advocates supplier diversity. “Having diversity in our supplier base, including appropriate attention to small businesses, is beneficial for many of the same reasons diversity benefits our company. We believe that it fosters creativity and innovation in the merchandise and services that we offer our members.”
Consumers continue to flock to the club retailer, as made evident in its first-quarter performance. The company posted a 7.5% increase in net sales, hitting $60.99 billion for the 12-week period ending Nov. 24, and boosted same-store sales by 7.1%. Traffic was up 4.9% in the United States, while earnings per share (EPS) came in at $4.04 versus the expected $3.79.
Meanwhile, Costco believes NCPPR's request to evaluate its DEI efforts would not be an efficient use of company resources. Further, the board claims that NCPPR’s proposal masks its true anti-diversity agenda under the guise of reducing risk.
“The proponent professes concern about legal and financial risks to the company and its shareholders associated with the diversity initiatives,” the company said. “The supporting statement demonstrates that it is the proponent and others that are responsible for inflicting burdens on companies with their challenges to longstanding diversity programs. The proponent’s broader agenda is not reducing risk for the company but abolition of diversity initiatives.”
However, Costco could face backlash for its refusal to dismantle its DEI policies. According to Newsweek, the club retailer is facing threats of a boycott from supporters of President-elect Donald Trump. Project 2025, a series of policies supported by several backers of the incoming Trump administration, lists abolishing DEI practices in both the public and private sectors among the core goals of the next conservative government. After Costco defended its current policies, some Trump supporters called for a boycott on social media.
By standing by its DEI commitments, Costco is setting itself apart from other major companies that have eliminated DEI roles and initiatives as a result of pressure from conservative groups. For example, Walmart said in November that it is withdrawing DEI programs. America’s biggest retailer joins Tractor Supply, Lowe’s, Ford, Harley-Davidson and Molson Coors in discontinuing DEI efforts.
NCPPR’s DEI proposal will be voted on at Costco’s annual shareholders meeting to be held by live webcast on Thursday, Jan. 23, at 2:00 p.m.
This article was first published on sister site Progressive Grocer.
