Costco Shareholders Vote Against Rolling Back DEI
Costco shareholders push back against efforts to undermine its pro-diversity policies and get a stark warning.
On the day before retail giant Target announced its plans to roll back its diversity, equity, and inclusion (DEI) initiatives, Costco shareholders overwhelmingly rejected a proposal intended to undermine its own pro-diversity policies.
On Thursday, January 23, the wholesale goods retailer considered a shareholder proposal – put forth by a right-leaning advocacy organization, the National Center for Public Policy Research – asking the company to issue a report outlining the risks associated with keeping DEI policies in place.
One such risk is the threat of boycotts from conservative consumers, many of whom claim that DEI initiatives disregard merit and disadvantage whites, males, and heterosexuals, as well as others who are not part of historically marginalized communities.
However, 98% of shareholders ultimately voted against the measure, reports Fox Business.
Costco’s board of directors had previously – and unanimously – come out against the proposal, arguing that efforts to diversify the company’s workforce, as well as its suppliers, help the company offer consumers a wider range of products while also enhancing their interactions with employees who reflect the surrounding community.
The National Center for Public Policy Research had argued that the company could potentially be sued over DEI initiatives, citing a Supreme Court ruling finding that race-based preferences in college admissions are unconstitutional and violate the Equal Protection Clause of the 14th Amendment.
But Costco’s board of directors, in a proxy statement responding to the proposal, argued it did not believe its pro-diversity efforts cross the line into discrimination.
“Consistent with our commitment to ‘obey the law,’ we regularly evaluate our practices concerning compliance with law, including evolving Supreme Court decisions,” the board wrote. “We believe that our diversity, equity and inclusion efforts are legally appropriate, and nothing in the proposal demonstrates otherwise.”
Costco’s rejection of the anti-DEI proposal stands in contrast to a larger backlash against pro-diversity programs at a number of major corporations, as well as executive orders by President Donald Trump seeking to roll back similar initiatives throughout the U.S. government and military.
A host of companies, including McDonald’s, Amazon, Walmart, Stanley Black & Decker, Molson Coors, Ford Motor Company, Lowe’s Hardware, Target, and Harley-Davidson, have all rolled back or eliminated their DEI initiatives as part of a rightward societal shift.
Following last week’s vote, a group of 19 Republican attorneys general wrote a letter to Costco CEO Ron Vachris, telling him that the company’s refusal to drop its DEI policies – which it labeled “discriminatory” – runs counter to the Supreme Court’s ruling against affirmative action in college admissions.
The letter urged the company to end such programs or initiatives, noting that some companies have been sued by employees over their DEI policies. The attorneys general also referenced an executive order by President Trump directing federal agencies to outline and take actions intended to pressure private companies to end pro-diversity programs, including by drawing up a list of companies who might be potential targets for litigation, reports Newsweek.
“Although Costco’s motto is ‘do the right thing,’ it appears that the company is doing the wrong thing – clinging to DEI policies that courts and businesses have rejected as illegal,” the attorneys general, led by Iowa Attorney General Brenna Bird and Kansas Attorney General Kris Kobach, wrote in the letter.
The attorneys general also demanded Costco respond to their letter within 30 days to either notify them that it has repealed its DEI policies, or explain why it has not done so.
“Costco should treat every person equally and based on their merit, rather than based on divisive and discriminatory DEI practices,” the letter concludes. “For the good of its employees, investors, and customers, Costco should ‘do the right thing’ by following the law and repealing its DEI policies.”
Despite Costco’s resistance, Ethan Peck, the deputy director of the National Center for Public Policy Research’s Free Enterprise Project, told Fox News Digital that he expects the company to eventually fold and eliminate its DEI policies.
Peck said that it is common for companies to reject shareholder proposals, regardless of topic, and noted that some other companies who eventually scuttled their DEI initiatives first opposed it.
“Just months before Boeing dropped DEI, they opposed our shareholder proposal requesting an audit of their DEI efforts,” Peck said. “So Costco doubling-down on DEI in the proxy statement is not as meaningful as has been made out to be. There’s still a decent chance that Costco drops DEI by the end of the year.”
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