Costco bucks national trend, doubles down on DEI

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While many companies have read the room and backed off their push for diversity, Costco is instead doubling down.

The board of directors for the big-box warehouse club pushed back on efforts to eliminate the retailer’s diversity, equity, and inclusion (DEI) program, urging shareholders recently to vote against a proposal to strike “discriminatory practices.”

The National Center for Public Policy Research included the proposal in Costco’s annual notice to shareholders ahead of the planned meeting which is scheduled for Jan. 23, 2025.

“Shareholders will vote on a proposal brought by the National Center for Public Policy Research challenging the legality of Costco’s DEI program after the Supreme Court’s ruling in SFFA v. Harvard that discriminating on the basis of race in college admissions violates the equal protection clause of the 14th Amendment,” Fox Business reported. “The proposal cites how attorneys general of 13 states have warned Fortune 100 companies that the ruling implicated corporate DEI programs, and a number of lawsuits have been filed.”

(Video Credit: WTHR)

“It’s clear that DEI holds litigation, reputational and financial risks to the Company, and therefore financial risks to shareholders,” the organization wrote in the proposal, citing the Supreme Court’s ruling in SFFA v. Harvard.

“And yet Costco still has such a program, though it was apprehensive enough to recognize this as it recently and quietly rebranded its DEI program to ‘People and Communities,’” the National Center for Public Policy Research wrote in the proposal. “But sticking a new label on discriminatory practices does not protect Costco and its shareholders from these risks.”

“With 310,000 employees, Costco likely has at least 200,000 employees who are potentially victims of this type of illegal discrimination because they are white, Asian, male, or straight,” the group stated. “Accordingly, even if only a fraction of those employees were to file suit, and only some of those prove successful, the cost to Costco could be tens of billions of dollars.”

Costco’s board of directors wrote to investors, defending the DEI programs.

“Our success at Costco Wholesale has been built on service to our critical stakeholders: employees, members, and suppliers. Our efforts around diversity, equity, and inclusion follow our code of ethics: For our employees, these efforts are built around inclusion – having all of our employees feel valued and respected,” they wrote.

“Our efforts at diversity, equity, and inclusion remind and reinforce with everyone at our Company the importance of creating opportunities for all. We believe that these efforts enhance our capacity to attract and retain employees who will help our business succeed. This capacity is critical because we owe our success to our now over 300,000 employees around the globe,” the message continued.

“We welcome members from all walks of life and backgrounds. As our membership diversifies, we believe that serving it with a diverse group of employees enhances satisfaction,” Costco’s board wrote. “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.”

Costco’s stand comes as multiple companies such as John Deere, Lowe’s, Harley Davidson, and Walmart have decided to pull back on DEI programs amid consumer blowback.

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Originally from New York, Powers graduated from New York University and eventually made her way to sunny South Florida. Powers also contributes to BizPac Review.