Topline
In a nearly unanimous decision, Costco shareholders voted in support of Costco’s current diversity, equity and inclusion initiatives after the National Center for Public Policy Research submitted a proxy proposal to audit the company’s “litigation, reputational and financial risks.” As the Trump administration levels against DEI, Costco is swimming against a tide causing numerous large retail corporations to dial back DEI initiatives, including Amazon, Walmart, McDonald’s, Lowe’s, Tractor Supply and most recently Target.
“We have always been purposefully non-political and a welcoming workforce has been integral to the ... [+]
Key Facts
According to preliminary results, over 98% of Costco shareholders voted down NCPPR’s proxy proposal that the company conduct an evaluation and publish a report on the company’s risks of maintaining its current DEI policies.
In mid-December, Costco’s board unanimously rejected NCPPR’s proposal in a proxy statement declaring the company regularly evaluates its practices “concerning compliance with law” and that the request for a study reflects a “policy bias” with which it disagrees.
The shareholder vote comes just days after President Trump issued an executive order dismantling DEI programs across the federal government, including putting employees who work in Diversity, Equity and Inclusion departments on paid leave and verifying all federal contractors don’t have DEI programs, which the administration believes violate anti-discrimination laws.
A follow-up executive order takes aim at DEI programs more broadly across the private sector, including publicly-traded corporations.
Background
The NCPPR proxy proposal to conduct and make public an audit of Costco’s DEI program seemed benign on the surface since it only called on the company to do a study not to take down or unwind its program. However, the company saw it differently. The Board stated inclusion was critical to making its employees feel valued and respected and that it welcomes diverse members from “all walks of life and backgrounds” because it drives greater employee satisfaction and enhances company “originality and creativity.” Yet, NCPPR claimed the company’s DEI program was hiding illegal “discriminatory practices” that factor race and sex in hiring and promotions. The company defended its program as being critical to its success and that all policies follow the law and Costco’s code of ethics. Shareholders agreed.
Crucial Quote
“We have always been purposefully non-political and a welcoming workforce has been integral to the company’s culture and values since its founding,” said Costco board chainman Tony James during the shareholder meeting.
Trump Adminstration Takes Aim Against Dei
In a pre-recorded message before the shareholder vote, NCPPR’s deputy director Ethan Peck declared, “DEI is illegal, immoral and detrimental to shareholder value,” and that it is “concealing a radical Marxist agenda.” The Trump administration appears to agree and is taking aim at eliminating “illegal DEI discrimination” in the private sector as well. In another executive order following that to eliminate federal DEI programs, the President directed the Office of Management and Budget to submit a report with a plan of “specific steps or measures” to deter illegal DEI programs and to identify up to nine potential organizations, including publicly-traded corporations,” that may be targets for litigation.
Tangent
Costco Teamsters, representing only about 8% of U.S. employees, have voted to strike when its current contract expires Jan. 31. The Teamsters claim the company is prioritizing corporate shareholders over the needs of “workers who made them a success.” In association with the shareholder meeting, the Teamsters held a rally outside company headquarters yesterday.
Coming Next
Apple faces an even more challenging anti-DEI proposal from the NCPPR at its upcoming shareholder meeting Feb. 28. The NCPPR proposes the company “consider abolishing its Inclusion & Diversity program, policies, department and goals.” The board recommends shareholders vote against the proposal stating it is unnecessary because the company has a well-established compliance program and maintains active oversight of legal and regulatory risks. “The proposal attempts to restrict Apple’s ability to manage its own ordinary business operations, people and teams and business strategies,” the board stated in its proxy filing.
Further Reading
Costco successfully defends its diversity policies as other U.S. companies scale theirs back (AP, 1/23/2025)
Conservative groups push banks to abandon DEI: Here are the organizations ending diversity programs – full list (Forbes, 1/22/2025)
Trump’s diversity orders rattle CEOs: What companies should know about new DEI rules (Forbes.com, 1/23/2025)
Costco Teamsters vote to strike, challenging Costco’s pro-worker stance (Forbes, 1/22/2025)
McDonald’s joins the stampede of corporations retreating from DEI (Forbes.com, 1/8/2025)
Costco is caught in the crosshairs of the DEI controversy (Forbes, 1/1/2025)
In Costco’s defense of DEI efforts: Lessons for Business Leaders (Forbes, 1/2/20205)
Corrected, Jan. 25: This article has been updated to remove a paragraph that erroneously refers to a letter from attorneys general from 19 states and the District of Columbia.
