Costco Defends Its DEI Policies as Other US Companies Shrink After Trump Action
Costco Pushes Back on Shareholder Proposal
Costco is pushing back on a shareholder proposal that urges the wholesale club operator to conduct an evaluation of any business risks posed by its diversity, equity and inclusion (DEI) practices. Investors were expected to vote on the recommendation during the company’s annual meeting Thursday.
The National Center for Public Policy Research’s Proposal
The National Center for Public Policy Research, a conservative think tank based in Washington, submitted the proposal, arguing that Costco’s DEI initiatives hold “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 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.
Costco’s Board of Directors
Costco officials could not be reached for comment on the DEI proposal. However, the company’s board of directors voted unanimously to ask shareholders to reject the motion. The board said 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 Benefits of DEI
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.
GlobalData’s View
Neil Saunders, managing director of consulting firm GlobalData’s retail division, said 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 DEI Contrast
Costco’s public stance in support of diversity, equity and inclusion programs contrasts with the positions taken in recent months by other big consumer brands, including Walmart, McDonald’s, and John Deere.
Lawsuits and Executive Order
Emboldened by the Supreme Court’s decision on affirmative action at colleges and universities, conservative groups have filed lawsuits making similar arguments about corporations, targeting 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.
The National Center for Public Policy Research’s Allegations
The National Center for Public Policy Research alleged that at least 200,000 of Costco’s 300,000 employees worldwide “are potentially victims of this type of illegal discrimination because they are white, Asian, male or straight.” If only a fraction of those employees were to sue Costco, the legal costs could be significant, the center said.
Costco’s Executive Ranks
Costco has a chief diversity officer, but the company’s executive ranks do not reflect the diversity of its customers. Nearly 81% of the executives Costco had in place last year were white, and 72% of them were men, according to data published on its website. Saunders said members of Costco’s management team typically stay a long time given the company’s solid and stable financial performance.
Conclusion
In conclusion, Costco is standing firm in its commitment to diversity, equity and inclusion, despite the pressure from the National Center for Public Policy Research and other conservative groups. The company’s board of directors has rejected the proposal, citing the benefits of DEI initiatives in fostering creativity, innovation, and customer satisfaction.
FAQs
* What is the National Center for Public Policy Research’s proposal?
The National Center for Public Policy Research has proposed that Costco conduct an evaluation of any business risks posed by its diversity, equity and inclusion practices.
* Why is the National Center for Public Policy Research pushing for this proposal?
The think tank argues that Costco’s DEI initiatives hold “litigation, reputational and financial risks to the company, and therefore financial risks to shareholders.”
* What is the current state of DEI initiatives in the US?
Some American companies have scaled back or retreated from their diversity policies, citing the U.S. Supreme Court’s decision on affirmative action in college admissions.
* What is the impact of the Trump administration’s executive order on DEI programs?
The executive order aims to terminate DEI programs within federal agencies, and conservative groups have filed lawsuits targeting corporate DEI initiatives.
