Costco Wholesale is facing a backlash from conservative shareholders who are calling for the company to evaluate the risks associated with its diversity, equity, and inclusion initiatives. The company's board of directors has unanimously rejected the proposal, arguing that its commitment to DEI is essential for its success.
Costco is opposing a shareholder proposal that calls for the wholesale club to assess any business risks associated with its diversity, equity, and inclusion ( DEI ) practices. Investors were anticipated to vote on this recommendation at the company's annual meeting on Thursday. This comes as numerous other U.S. companies have scaled back their DEI policies.
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.' 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. However, Costco's board of directors voted unanimously to ask shareholders to reject the motion. The board stated that 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. Costco officials were unavailable 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. Costco's public stance in support of DEI programs contrasts with the positions taken in recent months by other major consumer brands, such as Walmart, McDonald's and John Deere. Last week, over 30 Walmart shareholders, including Amalgamated Bank and Oxfam America, urged 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 anticipated to face opposition from the administration of President Donald Trump. 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. 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 placed on paid leave and eventually be laid off. Trump has labeled the programs 'discrimination' and insisted on restoring strictly 'merit-based' hiring
COSTCO DEI Shareholder Proposal Diversity Equity Inclusion Supreme Court Affirmative Action Conservative Think Tanks Employee Resource Groups Federal Agencies
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